A highly instructive Dan Schroeder report which highlights the public risk of the Ogden Fieldhouse Project
In the midst of an otherwise slow news day, we have a very special treat for our gentle Weber County Forum readers this morning.
Regular WCF contributor Dan Schroeder has been doing some serious gumshoe work, and has submitted to us a quite remarkable document pertaining the the Ogden Fieldhouse Project. Dan has carefully sliced and diced the December 29, 2010 Health & Leisure Advisors Ogden Fieldhouse Feasibility Study, conducted at least one telephone interview with the President of H&LA consultants, performed a few calculations and produced the following report and analysis, the product of which we are now delighted to present, for the enlightenment of our WCF readership:
(It's our understanding that Professor Schroeder has also submitted this document to Ogden City and Weber County officials.)
The document speaks for itself; so we'll skip our usual tedious summary and re-analysis, except to generally note that Dan's report exposes the weakness of some of the fundamental assumptions underlying the H&LA Feasibility Study and highlights the public risk of this project (possible downside, -$1.4 million/yr.). We're putting this up in raw form, but nevertheless invite our readers to chime in with your own comments and observations relative to this new and highly instructive Dan Schroeder document.
Don't let the cat get your tongues... there's much in Dan's newest report which merits even more thorough WCF reader discussion.
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18 comments:
Has Dan considered running for Council ... or Mayor?
I disagree with some of Dan's analysis.
For one thing, he states that the
"Study Report projects that the Ogden Fieldhouse aquatic facilities would attract a stable attendance of 467,000 from the third year onward"
In fact, it projects no such thing. That number was back calculated ... in other words, they took the low-balled operating costs, assumed a minimal profit margin, back calculated the required break-even attendance, then cooked up some comparables to "justify" those figures.
That's how these things are done in real life. In Dr. Schroeder's world of factual calculation, there is insufficient consideration for the chicanery that exists in the real world.
All one needs to do is ask, "What is the likelihood of this fun house drawing a half million people a year" to see how absurd this "study" was.
Dan's calculations assume an attendance of 376,000, an equally implausible figure.
A more reasonable estimate is 20,000 visitors per year. This leaves an annual operating deficit of almost $6 million per year.
These figures show just how easy this whole con can blow up in our faces. Dan's analysis is far too generous in accepting the rigged studies' figures, which for all practical purposes, are ad hoc fabrications.
Godfrey's Field House study, is only a study in modern con artistry, and deserves nowhere near the consideration the brilliant scientist Dr. Schroeder has given it.
Per the stable attraction of 467,000 people per year that works out to over 1275 people per day based on it being open 365 days per year. Can anyone really expect that kind of useage or even anyone wanting to be in a facilty that was that occuped.
This is absurd!
Please look past it if you feel I have not given the analysis so eloquently provided by Dan enough review and also forgive my inexperience with such massive budgetary considerations, but where in the numbers are all of the kickbacks listed for anyone who votes for this absolute mind boggling whale sized sinker of a dead weight project? Why don't we just double the size of the project and make twice as much money? Why stop there, lets build one of these in each city of Weber County and make bank? These assumptions are downright comical....
David and Disgusted:
Thank you for raising excellent points about whether the feasibility study can be dismissed on much simpler grounds. It's absolutely true that in my analysis I gave the consultants the benefit of the doubt and assumed that nothing in their report was simply fabricated.
Obviously I can't prove that the data from the eight "comparable" indoor waterparks wasn't fabricated. But the Study Report also contains data on 20 large outdoor waterparks, complete with names and locations (see page C-3). These attendance figures could be easily checked, so I very much doubt that the consultants made them up. And the data show that all of these outdoor waterparks attract thousands of customers per day.
This is one "reality check" on the claim that an indoor waterpark can also attract more than a thousand customers per day. I'm inclined to believe that such indoor waterparks really do exist. What we can't tell from the report is whether this kind of attendance is the exception or the rule. In any case, Item 1 in the final section of my report attempts to address the possibility that the eight "comparable" indoor waterparks might not be typical.
Another possibility, though, is that while large indoor waterparks can sometimes attract over a thousand customers per day, Ogden is not a suitable location for such a venture. I think it's very hard to test this hypothesis. The consultants based their assessment in part on the number of nearby hotel rooms, which can be compared to many of the other waterparks around the country. They also looked at local population data, but it's unclear whether they actually used this data in their estimates. In general, they did not explain much of their methodology and this is an obvious red flag.
One more point: Even if attendance is far less than projected, it doesn't mean that the annual operating deficit would be $6 million. Lower attendance would also result in lower expenses, as explained in my analysis. It would be interesting to ask what the expenses would be to keep all the facilities open 360 days per year even if no customers ever showed up. This would give us an absolute upper limit on the operating deficit. My guess is it would be in the vicinity of 3 or 4 million dollars.
Comedy Central:
The Study Report does mention "kickbacks" in the form of a certain amount of free use of the tennis courts by WSU, and of the pool by the local high schools. That's one reason why the revenues from these parts of the Fieldhouse are projected to be rather low compared to that from the waterpark.
Actually, I thought it was wise of Dan to analyze the feasibility study on its own terms using its own data. Very effective, I thought, in establishing a range of probabilities based on the data in the report itself and in illustrating that the report tilted in the direction of the higher end of the probability range regarding economic feasibility rather than the-mid range.
Let's not forget that we live in Utah, which is located in the United States. For the most part, Utah and most of the United States has some pretty great summer weather.
Which bring me to my point. Here in Utah we have some good outdoor water parks; Lagoon-A-Beach, Raging Waters, Seven Peaks and a new one in Sandy called Cowabunga Bay. Not to mention that a lot of cities have their own outdoor "water parks". Layton, Roy, Clearfield, etc.
Plus, let's not forget that most states also have some pretty great outdoor water parks. Much better than the ones we have here.
Now having said that, Utah and Utahns for the most part are outdoors type of people. We ski, snowmobile, rock climb, camp, swim and do many other activities outdoors. I would venture to guess that most Utahns would attend an outdoor water park rather than an indoor water park for the 4-6 months per year they can. I also assume that the Rock Climbing wall at the Junktion doesn't get as much use in the summer as it does in the winter. Same thing here. People aren't going to go to an indoor water park when they can go outdoors.
Plus people are not going to come to Ogden Utah to come to this waterpark when they can take their travel dollars and go to Disneyland, Hawaii, San Diego, Florida or other areas of our country in the summer. 1200 people per day in the summer? I think not.
As a parent of 4 children, I won't be taking my kids to this facility. Couldn't afford it if I wanted to. Plus I wonder how Gary Nelson feels about Ogden City building him a new competitor for his flowrider. Oh, I forgot, I don't really care because Ogden City built that for him too.
No pool,
The Study Report does list the various local outdoor facilities (and some small indoor ones) that would compete with the proposed Ogden waterpark. But then it never says whether the existence of these facilities figured into any of the projected attendance and revenue numbers. My guess is that it didn't, and that the consultants would justify this approach by saying the Fieldhouse waterpark (and pool) would be sufficiently different from any of the others (due to its location, size, and/or being entirely indoors) that the competition wouldn't have much effect on its attendance.
I don't recall seeing anything in the Study Report about varied indoor waterpark attendance caused by seasons or by regional recreational preferences. We could probably speculate until the cows come home about these things, but it's just speculation.
I use daily , with my children, the Dinosaur Park, The TreeHouse, The Nature Center, Lagoon-A-Beach, and the North Ogden Pool.
I see daily the amount of local visitors that these well run and quite attractive facilities bring to their respective locations.
You will not average 1000+ a day,
You will not average half tyhat.
Sp, lets get real and assume a few hundred, 6 days a week, local.
And do a cost analysis based on a quite generous 100,000 a year, local.
Unless people flock from Davis and SLC, there will be no line at the base of the slides, 250 days a year.
There will be lines, about 50 days a year.
No one responsible and honest would claim to expect more.
Excellent work Dan, I have said it before and will say it again - you are a treasure to the city of Ogden and the people of this area are damn lucky you chose to live here.
It may be in your report, or the one from the hucksters that did the "study", but is there information available that explains the population base around the water parks that are being use as a comparison to the one in Ogden. The one I have heard most prominently mentioned I believe was in Carson, California (that is the one the council people took the boondoggle to). Unless there were allowances made, I do not think there would be a legit comparison of the two considering that Carson sits in the middle of a metro area with about 15 million people and Ogden sits in one of about 1 million.
Also has any consideration been taken in the so called "study" to allow for the water park in Ogden (by the freeway near 12th) that went broke a couple of years ago?
Oz, I'll try to answer your questions:
* The comparison indoor waterparks in the study are not named, so there's no way to tell what population base (or tourist base) they serve.
* The facility in Carson, CA is a velodrome, not a waterpark. But because indoor bike racing is such a highly specialized sport, and velodromes (especially indoor velodromes) are so few and far between, the presumption is that the Ogden velodrome would draw users from over a wide area--maybe even the whole U.S. and Canada.
* I'm not familiar with a waterpark in Ogden that went broke. But it must have been much smaller and/or outdoors. I think this would different enough that any comparisons would be difficult.
Dan,
Found it interesting that this consulting firm that seems to specialize in water parks was picked to do a study on the whole field house. IMHO they are onjly qualified to address part of the project. Their main expetise seem to be water parks that are incorporated into hotel resorts.
You may want to read this article by the main man at H&LA. From what I've derived from your comments about their study, they have not done a full evaluation, per their own recommendations, of our market for a water park.
http://www.hladvisors.com/pdfs/Appraisal_MarketWaterparkResorts.pdf
Thanks for the link, Disgusted. As far as procedures go, I don't see anything in that document that was obviously bypassed in our case (aside from the elements that would be only for an appraisal of an existing facility).
But it's good to know that Mr. Sangree has done more than 100 studies of waterparks. I think I'll ask him how many of those studies were for waterparks that were (or would be) publicly owned.
How many of the 100 proposed water park "studies" have come back with the result of - NOT FEASIBLE?
what is zero? Alex
"What is zero? Alex" I don't care who you are, that's funny!
rumor has it numero uno had a pow wow with the "movers and shakers" last week saying nearly all the funding for this was pretty much a done deal...especially the bdo purse snatchin...all rumor of course....
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