MMICC 2010 - UCB

PRESENTED BY
WYNNE CHYOU | NIKITA MAHESHWARI | GANNON SHIH | JENNY ZHOU
HAAS SCHOOL OF BUSINESS

AGENDA 2010

I. Situational Analysis
II. Current Objectives
III. Executive Summary
IV. Recommendations
V. Financial Analysis
VI. Implementation
VII. Q&A

Situational Analysis | Executive Summary | Recommendations | Impact Analysis | Conclusion

SITUATIONAL ANALYSIS| CIRQUE DU SOLEIL VALUES 2010

Core Values
Creativity: Never compromise creativity; full creative control

Exclusivity: We don’t bring the show to you; each location has its own show

Expertise: Concentrate on what we are good at without stretching
ourselves too thin

Mission Goal: Pursue high-growth markets and opportunities without
compromising on any of our core values


SITUATIONAL ANALYSIS| FAILED PROJECTS 2010

Past failed projects violated core values

Failed Project Reason for Failure Core Value Violated

London Battersea Lack of creative control;
Slowness of development
Creativity
Project

Montreal Cirque Lack of expertise in new
industries eroded investor Expertise
Complex
confidence

Columbia Pictures
Limited creative Creativity
Battleship involvement


SITUATIONAL ANALYSIS| CURRENT ISSUES AND OBJECTIVES 2010

Current Objectives

Select Compatible Partners for show expansion

Show Distribution: Resident vs. Arena vs. Big top

Enter new industries and overcome inexperience issues

Avoid Brand Cannibalization in Vegas

Build revenues in existing locations


EXECUTIVE SUMMARY| RECOMMENDATION OVERVIEW 2010

Expand Develop Attract

Leverage existing
Enter nightlife
partnership with MGM Launch Reality TV
business in areas
Mirage to develop Series to build brand
with established
new resident shows recognition
presence
in attractive cities

Recommendation 1 Recommendation 2 Recommendation 3


RECOMMENDATION 1| RESIDENT VS. TOURING 2010

Objective: Grow shows in the Resident segment

Resident Shows Touring Shows

Profitability Higher Margins Lower Margins

Occupancy 90-95% 80%

Break-Even 60% 65%

Highest Ticket Price $150 $100

Shows Per Year 480 shows 324 shows

Although resident shows require a larger capital expenditure, they deliver
more value in the longer term due to higher profitability


RECOMMENDATION 1| PARTNERSHIP CRITERIA 2010

Four Criteria for
Establishing Partnerships

Creative freedom

Sustainability

Socially Responsible

High ROI


RECOMMENDATION 1| PARTNERSHIP CRITERIA 2010

MGM is a trustworthy, experienced partner to continue resident expansions

Four Criteria for
Establishing Partnerships

Creative freedom

Sustainability

Socially Responsible

High ROI


RECOMMENDATION 1| EXPAND MGM PARTNERSHIP 2010

Cirque du Soleil should expand into Abu Dhabi, Atlantic City, and Macau

City Tourism Growth Tourist Shopping Room for CdU Show
Expenditures Establishment

Macau

Abu Dhabi

Atlantic City

Detroit

Detroit is not a viable expansion due to low tourism growth
and low revenue potentials

RECOMMENDATION 1| RESIDENT EXPANSION BEYOND MGM 2010

Several cities of high potential exist that are not currently in
MGM`s plans

Potential Tourism Revenue
Expansion in 2007 ($Can)
LEGEND
London $12.1 Billion LONDON
NEW YORK CITY
New York City $28.9 Billion LOS ANGELES
Los Angeles $13.3 Billion BERLIN
SYDNEY
Berlin $11.3 Billion SHANGHAI

Sydney $9.7 Billion
Shanghai $39.0 Billion

Cirque du Soleil should strongly consider future establishments in Shanghai,
New York City and Los Angeles due to high tourism revenue and traffic


Source: www.ChinaDaily.com Source: www.sflnc.com

RECOMMENDATION 1| ACCOMPLISHMENTS 2010

Current Objectives







RECOMMENDATION 2| EXPANSION INTO NIGHT LOUNGES 2010

Create a unique night long Cirque du Soleil experience that maintains
Cirque`s image as a creative, exclusive brand
"Only 20% actually stay at the casino hotel but show goers drop an average
of $30 apiece [elsewhere]" -- B.Baldwin
Lounge Theme Marketing Strategy

`Soleil by Night` 2 Prong Strategy
• Masquerade themed lounges • Cross-selling tickets
• Showcase colorful decor & between show and club
latest technology • Synergies in marketing
• High ceilings and acrobats expenses
throughout • Promote club in current
shows


RECOMMENDATION 2| EXPANSION INTO NIGHT LOUNGES " SOLEIL BY NIGHT " 2010

Create Cirque du Soleil themed night clubs to increase avg. expenditure
per consumer and avoid cannibalization of existing shows.

Target Location Criteria Short Term vs. Long Term

Length Place Partner
Location with Cirque
du Soleil Show Short Term Vegas
Places where people
stay overnight
Long Term •Atlantic City
Places with lively night
•Macau
life •Abu Dhabi


RECOMMENDATION 2| IMPLEMENTATION CASE IN LAS VEGAS 2010

Identify poor performing, low profit generating lounges and leverage
partnerships to rent that venue

Case Study: Prive and Living Room Nightclub in Las Vegas

Criteria Met:

 Venue located 1 block from MGM hotel

 Low profitability, threat of bankruptcy with
pressure to sell or close

 Large venue with in place infrastructure for Cirque
du Soleil design



Current Objectives







RECOMMENDATION 3| TALENT REALITY SHOW ‘THE ARTISTE’ 2010

Strengthen presence on television media and increase brand
awareness among new demographics

The Artiste: Become a part of the Next Cirque du Soleil Show...

The Basis Location Logistics
• Weekly challenges are USA: there is a large Cirque du
assigned to candidates and Soleil presence in North
weekly elimination rounds America and huge trend in large
procure finalist reality show viewership

• Cirque du Soleil staff will
coach candidates prior to Network Logistics
challenge events
ABC Network : ABC is already a
subsidiary of Disney, an existing
partner


RECOMMENDATION 3| TALENT REALITY SHOW CASE STUDIES 2010

Similar reality shows with parallel structure have enjoyed success

The Apprentice The Ultimate Fighter
• The Apprentice applicant • Applicants are pre-selected
process through application process
• Donald Trump assigns • Elimination fights occur
weekly challenges to weekly
candidates
• Aired 15 episodes per • Aired 129 episodes total
season for 4 seasons • Boosted an esoteric "UFC"
• Earned #7 in number of brand into mainstream
viewers, with 20.7M viewers viewership and recognition
weekly
• Has greatly increased brand
recognition of the Trump
brand and logo



Current Objectives







IMPACT ANALYSIS 2010

IRR Payback

Single Resident Expansion 1-Yr: 94% 5-Yr: 216% 0.52 Years

Single Nightclub Expansion 2-Yr: 24% 5-Yr: 64.9% 1.43 Years

Reality Show 1-Yr: 30% 2-Yr: 331% 0.77 Years


CONCLUSION| IMPLEMENTATION TIMELINE 2010

Task Year 0 Year 1 Year 2 Year 3 Year 4 Year 5+
Recommendation 1: Residence Expansions
Development of program
Begin partnership talks with MGM
Construction of theater
Acrobat training
Hiring of acrobats and technicians
Promotion of the event
Begin showing
Recommendation 2: Club "Soleil Night"
Development talks with MGM
Secure rental of club venue
Promotion of club
Hiring of staff
Evaluate success
Expand nightclub reach to branches
Remodel club venue
Recommendation 3: Reality TV Show
Develop program proposal and business model
Establish deal with a potential network
Hold auditions and hire cast and technicians
Filming of program
Airing of program
Promotion through advertisement of show


CONCLUSION| RECOMMENDATION SUMMARY 2010

Expand Develop Attract

Expand Into New Markets ``Soleil by Night`` The Artiste

Access Spending ⁄Location Occupancy Rate

Creativity . Sustainability . Profitability


Q&A 2010

Content Appendix Slides (cont.)
Situational Analysis - Values Why Not Expand Touring Shows
Situational Analysis – Failures Arena Over Big Top
Situational Analysis – Current Issues Cirque du Soleil`s Value-add for Casinos
Executive Summary Top 10 Gambling Getaways
Recommendation 1 Why Cirque Complex Did Not Work
Recommendation 2
Recommendation 3 Financials
Impact Analysis Historical Revenue & Ticket Sales Data
Conclusion – Summary Show Profit Model
Implementation Timeline Show Break-Even Analysis
Resident Show Expansion Model
Appendix Slides Nightclub ROI (1)
Risks & Mitigations (Rec 1) Nightclub ROI (2)
Risks & Mitigations (Rec 2) Nightclub Revenue Projection
Risks & Mitigations (Rec 3) Nightclub Operating Profit Projection
Partnership Implementation Reality Show Revenue Projection
Managing Creativity Reality Show Operating Profit Projection
Mitigating Creativity Risks Alternative Strategies
Competitor Analysis


APPENDIX|RISKS & MITIGATIONS 2010

Risks for Recommendation 1: Expansion Mitigation

Large investment expenditure for venue Historical growth has shown that
construction does not receive due ROI even worst-case is still sufficient
Competing with established competitor Differentiate the show as exclusive
shows in target geographic location with premium ticket pricing
Cultural differences per geographic Tailor new show to the specific
location may hinder acceptance of a show regions culture



Risks for Recommendation 2: Night Club Mitigation

Inability to find a new locale for venue on Expand into an existing venue that
the Vegas strip by leasing
Cannibalism of existing MGM-owned clubs Look into revamping poor
and equivalents in its hotels performing clubs outside of MGM
Low attendance rate or insufficient brand Extensively use promotions,
awareness of new club development advertisements and discounts



Risks for Recommendation 3: Reality TV Mitigation

Low amount of viewers due either to Promote heavily with existing
unawareness or disinterest membership base
Lack of advertisement sponsors to Leverage existing partnerships and
generate sufficient revenue returns introduce new show to them
Reality TV and related industry is not our Hire outside directors as well as
expertise utilize past case studies


APPENDIX| PARTNERSHIP IMPLEMENTATION 2010

City Example of Partner Capacity Example Shows
Los Angeles Kodak Theater 3,401 “Hollywood“
Los Angeles Pantages Theater 2,703 “Hollywood“
Shanghai Grand Theater 1,800 “Asia“
New York City Broadway Theater 500 “Broadway“
New York City WaMu Theater 5,600 “In the City“


APPENDIX| MANAGING CREATIVITY 2010

Creativity is the Cornerstone of Cirque du Soleil

Guiding Quotes by Management How to Maintain Creative Edge

``Always put creativity first`` Rotate Stage Directors

Set strict partnership selection
``Maintain full creative control`` criteria
No outsourcing talent
``Show comes before business``
Spend 2-3 years planning shows


APPENDIX| MITIGATING CREATIVITY RISKS 2010

Don`t Overextend
Example: Cirque Complex

Familiar
Territory

Leverage Existing
Partnerships Start in Existing Markets

(MGM for masquerade) (Las Vegas)


APPENDIX| WHY NOT EXPAND TOURING SHOWS 2010

``We deliberately chose a strategy of exclusivity``

We want to be a ``diamond``
Exclusivity
Core Value
Maintain prestigious image value

Demand High Prices and Margins

Maintain current number of tour shows (7)
How Maintain current tour locations and length

Arena over Big-Top


APPENDIX| WHY ARENA STYLE OVER BIG TOP STYLE 2010

Arenas are more efficient to set-up, less expensive to operate, and more modern

Arena Big Top
Show Length Full Week Less Than Week

Set-up Employees 96 people 200 people

Set-up Time 9 hours 9 days

Take-down Time 2 hours 2.5 days

Capacity 2,500 seats 8,000-12,000 seats
Source: Gateway


APPENDIX| CIRQUE DU SOLEIL`S VALUE-ADD FOR CASINOS 2010

Introduction of a Cirque du Soleil Show has benefited MGM Mirage`s other segments

Casino Show Seats Benefit

New York New York Zumanity 1,250 23% increase in Net Revenue

The Mirage Love 2,000 $25 mn growth in EBITDA impact in
following year

MGM Grand Ka 2,000 13% increase in slot revenues

Note: Show goers drop an average of $30 apiece on dinner or drinks


APPENDIX| TOP 10 GAMBLING GETAWAYS 2010

MSNBC Casino City Times

1. Aruba 1. Las Vegas
2. Atlantic City 2. Macau
3. Goa 3. Atlantic City
4. Las Vegas 4. Australia
5. Macau 5. Mississippi
6. Mississippi Gulf Coast 6. France
7. Monte Carlo 7. Los Angeles

Source: msnbc Source: Casino City Times


APPENDIX| WHY THE CIRQUE COMPLEX DID NOT WORK 2010

`Interactive museums, night clubs where customers dance in water and hotels that add
a surreality to five-star service`

Location Features Cost Reasons Failed Takeaway

London`s High-end retail 1 Bn Slowness of Choose
Battersea Restaurant Pounds + Developments partnerships
Power Entertainment Center carefully with
Station 2,000-seat Theater Lack of creative focus on vision
2 Hotels Control over Project and creative
Convention Center control

Montreal 100-room Hotel, Spa, C$100Mn Lack of investors Concentrate on
Restaurant what we are
Multi-use Theater Lack of expertise in good at
hotels and
restaurants business


APPENDIX|HISTORICAL REVENUE & TICKET SALE DATA 2010

Annual Tickets Cumulative Tickets
Year Revenues ($C) % Growth Sold (Mil) % Growth Revenue/# Tickets Sold (Mil)
1992 35 -- 0.5 -- 70.0 3.0
1993 50 42.86% 1.0 100.00% 50.0 4.0
1994 80 60.00% 2.0 100.00% 40.0 6.0
1995 100 25.00% 2.0 0.00% 50.0 8.0
1996 140 40.00% 2.5 25.00% 56.0 10.0
1997 150 7.14% 2.5 0.00% 60.0 13.0
1998 180 20.00% 2.5 0.00% 72.0 15.0
1999 300 66.67% 4.0 60.00% 75.0 19.0
2000 380 26.67% 4.0 0.00% 95.0 23.0
2001 420 10.53% 5.0 25.00% 84.0 28.0
2002 450 7.14% 6.0 20.00% 75.0 34.0
2003 475 5.56% 7.0 16.67% 67.9 41.0
2004 500 5.26% 7.0 0.00% 71.4 48.0
2005 590 18.00% 7.0 0.00% 84.3 54.0
2006 630 6.78% 8.0 14.29% 78.8 61.0
2007 700 11.11% 10.0 25.00% 70.0 71.0


APPENDIX|SHOW PROFIT MODEL 2010

Resident Show Touring Show
Fixed Cost
Big top $0 $13,000,000
Equipment $0 $7,000,000
Production $15,000,000 $30,000,000
Total $15,000,000 $50,000,000

Average ticket price $120 $150

Average Profit Margin 80% 80%
Total Operating Expenses/ Show $164,160 $240,000

Shows per week 10 9
Weeks per year 48 36
Shows per year 480 324
Available seats per show 1900 2500
Occupancy rate 90% 80%
Occupied seats per show 1710 2000
Occupied seats per year 820800 648000

Total Revenue (M) $98,496,000 $97,200,000
Revenue per show $205,200 $300,000
Profit per show $41,040 $60,000


APPENDIX|SHOW BREAK-EVEN ANALYSIS 2010

Resident Show Touring Show
Average ticket price $120 $150
Shows per year 480 324
Available seats per show 1900 2500
Profit per show $41,040.00 $ 60,000.00

Break-Even Statistics
Breakeven occupancy rate 60% 65%
Revenue at Break-even Occupancy $65,664,000 $78,975,000
Revenue per show to Break-even $136,800 $243,750
Shows to Break-even 365.5 833.3
Years to Break-even 0.76 years 2.57 years


APPENDIX|RESIDENT SHOW EXPANSION MODEL 2010

Year
0 1 2 3 4 5
Number of shows opened 0 1 0 0 0 0
Total Shows 0 1 1 1 1 1
Average ticket price $120 $120 $130 $130 $130 $130
Shows per year 480 480 480 480 480 480
Avg. Available seats per show 2000 2000 2000 2000 2000 2000
Occupancy rate 90% 90% 90% 93% 93% 95%
Occupied seats per show 1,800 1,800 1,800 1,860 1,860 1,900
Occupied seats per year 864,000 864,000 864,000 892,800 892,800 912,000
Revenue per new show $0 $103,680,000 $0 $0 $0 $0
Total Revenue $0 $103,680,000 $112,320,000 $116,064,000 $116,064,000 $118,560,000

Production costs per show $ 180,000,000 $ 180,000,000 $ 180,000,000 $ 180,000,000 $ 180,000,000 $ 180,000,000
Production Costs to MGM 91.7% 91.7% 91.7% 91.7% 91.7% 91.7%
Fixed Cost : Production Costs $15,000,012 $0 $0 $0 $0 $0
Variable Cost: Theater and Show Ops $0 $88,128,000 $88,128,000 $88,128,000 $88,128,000 $88,128,000
Total Cost $15,000,012 $88,128,000 $88,128,000 $88,128,000 $88,128,000 $88,128,000

Operating profit -$15,000,012 $15,552,000 $24,192,000 $27,936,000 $27,936,000 $30,432,000
Creative Royalty $13,478,400 $14,601,600 $15,088,320 $15,088,320 $15,412,800
Net Cash Flow -$15,000,012 $29,030,400 $38,793,600 $43,024,320 $43,024,320 $45,844,800

1-Year IRR 94%
5-Year IRR 216%
Break-even 0.52 Years


APPENDIX|NIGHTCLUB ROI (PART 1) 2010

2008 2009 2010 2011 2012 2013
Total clubs 1 1 1 1 1
Club capacity 2,000 2,000 2,000 2,000 2,000
Club occupancy rate 60% 60% 60% 60% 60%
Average club occupancy 1,200 1,200 1,200 1,200 1,200

Cirque attendees 1,800 1,800 1,860 1,860 1,900
% of Cirque attendees 35% 45% 55% 60% 60%
Cirque and club attendees 630 810 1,023 1,116 1,140
Outside attendees 570 390 177 84 60
Entrance price - Cirque attendees $40 $40 $45 $45 $50
Entrance price - Outside attendees $50 $50 $55 $55 $60
Consumption expenditure per person $40 $45 $50 $55 $60

Cirque attendee revenue $25,200 $32,400 $46,035 $50,220 $57,000
Outside attendee revenue $28,500 $19,500 $9,735 $4,620 $3,600
Consumption revenue $48,000 $54,000 $60,000 $66,000 $72,000

Number of Tables 50 50 50 50 50
Table Occupancy rate 50% 50% 50% 50% 50%
Table Reservations 25 25 25 25 25
Price per Table $3,000 $3,000 $3,000 $3,000 $3,000
Table Revenue $75,000 $75,000 $75,000 $75,000 $75,000

Total Ticket Revenue $53,700 $51,900 $55,770 $54,840 $60,600
Total Consumption Revenue $48,000 $54,000 $60,000 $66,000 $72,000
Nights open a year 234 234 234 234 234
Annual revenue per club $12,565,800 $12,144,600 $13,050,180 $12,832,560 $14,180,400


APPENDIX|NIGHTCLUB ROI (PART 2) 2010

2008 2009 2010 2011 2012 2013
Total nightclub revenue $12,565,800 $12,144,600 $13,050,180 $12,832,560 $14,180,400
Consumption Margin 70% 70% 70% 70% 70%
Total COGS $ 14,400.00 $ 16,200.00 $ 18,000.00 $ 19,800.00 $ 21,600.00
Gross Profit $12,551,400.00 $12,128,400.00 $13,032,180.00 $12,812,760.00 $14,158,800.00

Expenses (per club)
SG&A $ 2,513,160.00 $ 2,428,920.00 $ 2,610,036.00 $ 2,566,512.00 $ 2,836,080.00
Rent Expense $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00
Utilities Expense $ 628,290.00 $ 607,230.00 $ 652,509.00 $ 641,628.00 $ 709,020.00
Total Expenses (per club) $ 5,541,450.00 $ 5,436,150.00 $ 5,662,545.00 $ 5,608,140.00 $ 5,945,100.00
Total Operating Expenses $ 5,541,450.00 $ 5,436,150.00 $ 5,662,545.00 $ 5,608,140.00 $ 5,945,100.00

Operating Profit $7,009,950.00 $6,692,250.00 $7,369,635.00 $7,204,620.00 $8,213,700.00
Net Cash Flow -$ 10,000,000 $7,009,950.00 $6,692,250.00 $7,369,635.00 $7,204,620.00 $8,213,700.00

2-Yr IRR 24.0%
5-Yr IRR 64.9%
Payback Period 1.43


APPENDIX|NIGHTCLUB REVENUE PROJECTION 2010

2009 2010 2011 2012 2013
Number of new clubs 1 3 0 0 0
Total clubs 1 4 4 4 4
Club capacity 2,000 2,000 2,000 2,000 2,000
Club occupancy rate 60% 60% 60% 60% 60%
Average club occupancy 1,200 1,200 1,200 1,200 1,200

Cirque attendees 1,800 1,800 1,860 1,860 1,900
% of Cirque attendees 35% 45% 55% 60% 60%
Cirque and club attendees 630 810 1,023 1,116 1,140
Outside attendees 570 390 177 84 60
Entrance price - Cirque attendees $40 $40 $45 $45 $50
Entrance price - Outside attendees $50 $50 $55 $55 $60
Consumption expenditure per person $40 $45 $50 $55 $60

Number of Tables 50 50 50 50 50
Table Occupancy rate 50% 50% 50% 50% 50%
Table Reservations 25 25 25 25 25
Price per Table $3,000 $3,000 $3,000 $3,000 $3,000
Table Revenue $75,000 $75,000 $75,000 $75,000 $75,000

Total Ticket Revenue $53,700 $51,900 $55,770 $54,840 $60,600
Total Consumption Revenue $48,000 $54,000 $60,000 $66,000 $72,000
Nights open a year 234 234 234 234 234
Annual revenue per club $12,565,800 $12,144,600 $13,050,180 $12,832,560 $14,180,400


APPENDIX|NIGHTCLUB OPERATING PROFIT PROJECTION 2010

2008 2009 2010 2011 2012 2013
Total nightclub revenue $12,565,800 $48,578,400 $52,200,720 $51,330,240 $56,721,600
Consumption Margin 70% 70% 70% 70% 70%
Total COGS $ 14,400.00 $ 16,200.00 $ 18,000.00 $ 19,800.00 $ 21,600.00
Gross Profit $12,551,400.00 $48,562,200.00 $52,182,720.00 $51,310,440.00 $56,700,000.00

Expenses (per club)
SG&A $ 2,513,160.00 $ 2,428,920.00 $ 2,610,036.00 $ 2,566,512.00 $ 2,836,080.00
Rent Expense $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00 $ 2,400,000.00
Utilities Expense $ 628,290.00 $ 607,230.00 $ 652,509.00 $ 641,628.00 $ 709,020.00
Total Expenses (per club) $ 5,541,450.00 $ 5,436,150.00 $ 5,662,545.00 $ 5,608,140.00 $ 5,945,100.00
Total Operating Expenses $ 5,541,450.00 $ 21,744,600.00 $ 22,650,180.00 $ 22,432,560.00 $ 23,780,400.00

Operating Profit $7,009,950.00 $26,817,600.00 $29,532,540.00 $28,877,880.00 $32,919,600.00


APPENDIX|REALITY SHOW REVENUE PROJECTION 2010

2008 2009 2010 2011 2012 2013
Revenue

Touring Shows
Average number of seats 2,000 2,000 2,000 2,000 2,000
Number of shows 6 7 6 6 6
Total number of seats 12,000 14,000 12,000 12,000 12,000
Total shows per year 324 324 324 324 324
Annual seats 3,888,000 4,536,000 3,888,000 3,888,000 3,888,000

Resident Shows
Average number of seats 1,710 1,710 1,710 1,710 1,710
Number of shows 7 8 8 8 8
Total number of seats 11,970 13,680 13,680 13,680 13,680
Total shows per year 480 480 480 480 480
Annual seats 5,745,600 6,566,400 6,566,400 6,566,400 6,566,400

Total number of seats 9,633,600 11,237,270 10,611,722 10,602,964 10,772,489
% increase in attendees 1.4% 1.4% 1.4% 3.0% 3.0%
Total increase in attendees 134870.4 157,322 148,564 318,089 323,175

Average price per ticket $100 $100 $100 $100 $100
Increase in attendee revenue $13,487,040 $15,732,179 $14,856,410 $31,808,892 $32,317,467

% of attendees who purchase DVDs 0% 20% 20% 20% 20%
Price per DVD 25 25 25 25 25
DVD Revenue $0 $56,186,352 $53,058,609 $53,014,821 $53,862,445

Total Revenue $13,487,040 $71,918,531 $67,915,019 $84,823,713 $86,179,911


APPENDIX|REALITY SHOW OPERATING PROFIT PROJECTION 2010

2008 2009 2010 2011 2012 2013
Total Revenue $13,487,040 $71,918,531 $67,915,019 $84,823,713 $86,179,911

Operating costs:
Average cost per episode $700,000 $700,000 $700,000 $700,000 $700,000
Number of episodes 10 10 10 10 10
Production costs $7,000,000 $7,000,000 $7,000,000 $7,000,000 $7,000,000
Winner's new contract 0 75,000 75,000 75,000 75,000
Total costs $7,000,000 $7,075,000 $7,075,000 $7,075,000 $7,075,000

Operating profit $6,487,040 $64,843,531 $60,840,019 $77,748,713 $79,104,911
Development Cost -$5,000,000
Net Cash Flow -$5,000,000 $6,487,040 $64,843,531 $60,840,019 $77,748,713 $79,104,911

1-Yr IRR 30%
2-Yr IRR 331%
Payback 0.77


APPENDIX| ALTERNATIVE STRATEGIES 2010

Alternative Strategy Pros Cons
Cruises -Targets high-end -Lower viewership per
sophisticated customers performance
-Global audience -Limited number of shows
-Infrastructure available for per week
general shows -Low ROI
Hotel Operation -Huge revenue potential -Lack of experience in this
-Potential venue for future business segment
shows -High fixed cost to operate
Interactive Museum - Engages cutting-edge -Low Revenue potential
technologies -Many competing museums,
lack of differentiation

High-End Dining - New market segment -Not our expertise
-Chain could overextend
brand


APPENDIX| COMPETITIVE POSITIONING 2010

Competitor Line of Business The Cirque Advantage

Dragone • Director from Cirque du Soleil •Larger scale
•Similar Productions •Partnerships with global
•Upcoming Project in Macau businesses

Feld Entertainment • Ringling Bros. • Different Target Demographic
•Disney on Ice of Adults vs. Families
•Disney Live •No repeats of shows

Dodger Properties •Major Broadway Productions •Huge creative team that
handles all aspects of creative
process
•Production of more creative,
interpretive shows

Source: Businessweek

APPENDIX| WHY ABU DHABI & ATLANTIC CITY 2010

Tourism Reviews

• The survey demonstrates that Atlantic City remains an attractive
destination for tourists
• 96% of visitors view Atlantic City as becoming more attractive.
• 99% would recommend Atlantic City to friends or family members.
• Eleven casinos where you also get to enjoy the pleasures of celebrity
chef restaurants, nightclubs in New York style and sprawling spas.
historic concert hall where musical bands like The Police, The Rolling
Stones and Madonna
• Casinos are great attractions with sparkling new retail, dining and
entertainment complexes like The Pier Shops at Caesars (where
Tiffany & Gucci boutiques hold court) and the Havana-inspired The
Quarter at Tropicana.


APPENDIX| WHY ABU DHABI & ATLANTIC CITY 2010

Annual Visit-Trips to Atlantic City (in thousands)
Franchise
Year Automobile Casino Bus Air Rail Total
Bus
2008 25,903 4,910 505 250 245 31,813
2007 26,929 5,408 501 260 202 33,300
2006 27,545 6,041 526 260 162 34,534
2005 27,889 6,104 519 261 151 34,924
2004 25,815 6,600 495 261 152 33,323
2003 24,553 6,764 504 261 142 32,223
2002 24,676 7,586 514 268 143 33,188
2001 23,501 7,985 519 276 139 32,420
2000 23,177 9,015 536 323 133 33,184
1999 23,247 9,342 539 396 128 33,652
1998 23,293 9,903 530 447 127 34,300
Source: South Jersey Transportation Authority


MMICC 2010 - UCB

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