economics of opening a - association of children's museums · 2018-06-13 · economics of...
TRANSCRIPT
Economics of Opening a
Children’s Museum
Elena Kazlas
Principal, ConsultEcon
Peter Kuttner, FAIA
Principal, CambridgeSeven
Esther De Sola-Pijl
Children’s Museum Curaçao
Rebecca Shulman Herz
The Peoria PlayHouse Children’s Museum
Peter Olson
Knock Knock Children’s Museum
Outline
Today’s Points
Market and Operating Viability
Elena Kazlas, ConsultEcon
Site, Concept, Hard Costs vs. Soft Costs
Peter Kuttner, CambridgeSeven
Pre-Opening Experience & Managing DonorsEsther De Sola-Pijl, Children’s Museum Curaçao
Rebecca Shulman Herz, The Peoria PlayHouse
Children’s Museum
Peter Olson, Knock Knock Children’s Museum
Importance of Understanding Your
Museum’s Market and Operating Viability
• Reviews Proposed Site(s) / Location from a
Market & Economic Perspective
• Identify Target Audiences and Market Segments
• Size and Scale of Available Markets
• Identify Range of Visitation and Use Potential
• “Right size” Facility and its Components
Importance of Understanding Your
Museum’s Market and Operating Viability
• Link Design Development and Decision Making
to Market Factors and Business Planning
• Identify Earned Revenue Potential
• Identify Non-Earned Revenues Required for
Sustainable Operations
• Informs Capital and Annual Fundraising Needs
in the Public and Private Sector
Keys to
Successful Museum Planning
Source: ConsultEcon, Inc.
Target Audiences
Source: ConsultEcon, Inc.
Market and Economic
Feasibility Process
Source: ConsultEcon, Inc.
What is Your
Market Area Definition
Source: ESRI, ConsultEcon, Inc.
• Key to Market Analysis is Defining and
Segmenting the Market Area
• Potential Data Sources to Use:
• Resident market – Census, Esri,
School District, State/Local Gov., etc.
• Tourist market – state and local
destination marketing organizations
What is Your
Market Area Definition
Source: ESRI, ConsultEcon, Inc.
• Apply “Gravity Model” Approach
• Adjust definition based on:
• Existing Attendance Patterns, if Available
• Population and Household Composition
• Demographic and Economic Trends
• Trends in Leisure / Cultural Participation
• Transportation Networks
• Development Pattern / Urbanization
Drive Time Analysis
Source: ESRI, ConsultEcon, Inc.
• 10-, 20-, and
30-Minute
Drive Time
Areas
• How far is
your
potential
market
reach?
Drive Time Analysis
Source: ESRI, ConsultEcon, Inc.
• 30-, 60-, and
90-Minute
Drive Time
Areas
• How far is
your
potential
market
reach?
Rings Analysis
Source: ESRI, ConsultEcon, Inc.
• 25- and 50-
Mile Rings
• Day trip
tourist is
often defined
as person
who travels
more than
50 miles one
way on a trip
Metro Area
Source: ESRI, ConsultEcon, Inc.
• Metro
Area
includes
Franklin,
Johnson
and Wake
Counties
Mixing Methods
Source: ESRI, ConsultEcon, Inc.
• Metro Area and Rings Map Overlay
Mixing Methods
Source: ESRI, ConsultEcon, Inc.
• Metro Area and Drive Time Areas Map Overlay
Mixing Methods
Source: ESRI, ConsultEcon, Inc.
• Metro Area and Drive Time Areas Map Overlay
Rings Analysis
Source: ESRI, ConsultEcon, Inc.
• Drive Times Areas and Rings Map Overlay
Competitive Context
Source: Knock Knock Children’s Museum
Market and Economic Analysis
• Components of Market Analysis
• Resident Markets
• Tourist Markets
• Local and Regional Attractions
• Competitive and Complementary
Context
• Industry Benchmarking
• Case Studies / Comparable Projects
Market and Economic Analysis
• Components of Site Analysis
• Location
• Site Characteristics
• Adjacent, Nearby and Supportive Uses
• Regional Highways and Local Road
Network
• Accessibility and Visibility
• Parking Potential
• Public Transportation Context
Market and Economic Analysis
• Visitation Potential Analysis
• Clear Resident and Tourist Market
Segmentation to Avoid Double Counting
• “Top Down” Approach
• Capture Rates
• General Admissions
• Group Admissions
• Memberships and Admissions
Market and Economic Analysis
• Visitation Potential Analysis (continued)
• “Bottom Up” Approach
• Linking Facility Program Areas to
Visitation Categories
• Identify Key Organizational
Programs, Events and Facility
Rentals
• What’s the Marketing Plan?
• What’s the Business Plan?
Market and Economic Analysis
• Visitation Potential Analysis (continued)
• Understanding Seasonality
• Facility Throughput and Peak
Attendance Days
• “Right Sizing” the Plan for High
Visitation Days
• Market-Based Physical Planning
Parameters
Market and Economic Analysis
• Operating Potential Analysis
• Mix of Sources of Revenue
• Earned Revenue Potential
• Non-Earned Revenue Requirements
• Other Investment / Endowment Revenue
• Illustrative Personnel Plan
• Operating Expenses
• Net Operating Income
• Capital and Operating Reserves
• Replacement Costs
• Debt Service – not recommended
Make Your Case – Socio-Economic
Benefits of New Children’s Museum
1. One Time Construction Impacts2. New Jobs3. Economic and Fiscal Impacts due to Ongoing
Operations (includes direct, indirect and induced)4. Qualitative Assessment of Economic Impacts
a) Childhood Development b) Community Development and Revitalizationc) Expansion of Tourism Offeringsd) Quality of Life - Ultimately, a new or expanded
children’s museum can be a source of community pride and identity, enhancing a location as a place to live, work, and recreate, and thus improving all aspects of local economy and community.
Economic Impacts -
Multiplier Effect Flow Chart
Source: ConsultEcon, Inc.
Socio-Economic Impact Study
Quantifiable Impact Categories
• Jobs
• Earnings
• “Direct” Spending
• Development, Ongoing Operations, and
Off-Site Spending Associated with Visit
• “Indirect and Induced” Multiplier Effects
due to Direct Spending Categories
• Total Impacts = Direct + Indirect + Induced
Socio-Economic Impact Study
Quantifiable Impact Categories (continued)
• Fiscal Revenue Generation
• Permitting and Other One Time
Development Related Fees
• Annual Income Taxes
• Annual Sales and Use Taxes
• Annual Room Taxes
• Potential Fiscal Expenses
• One-Time Development Related
• Annual Public Safety
Socio-Economic Impact Study
Qualitative Community Benefits
• New Quality of Life Cultural Amenity
• New Leisure Time Destination and
Community Event Venue that Promotes
Community Connectivity, Social
Cohesion, and Pride
• New Informal Education Infrastructure
and Programming to Support Learning
for Target Audiences (youth, families,
and other potential niche segments)
Socio-Economic Impact Study
Qualitative Community Benefits (continued)
• New Tourist Infrastructure to Increase
Tourist Spending / Lengthen Tourist
Stays
• Community Revitalization – Filling
Vacant Space or Encouraging Nearby
“Spillover” Development
• Community and Destination Branding
• Public-Private Partnership Building
Site and Concept Drivers
as Related to Market Analysis
• Market/Attendance Potential Contributes to Size
and Scale of Exhibit Areas
• Exhibit Areas, Organizational Programs, and
User Group Demand for Rental Space
Contribute to Overall Facility Size and Scale
• Local Competitive Context and Comparable
Institutions Experience Impact Program
• Parking Requirements and Local Zoning and
Building Ordinances
Site and Concept
Opportunities
• Market/Attendance Generates Exhibit Area
• Exhibit Area Generates Facility Size
• Local Comparable Institutions Impact Program
• Parking Requirements
• Education Component
• Retail Shop
• Food Service
• Earned Income Spaces
• Birthday Party
• Facility Party
Site Concept Size
Exhibit Size 100,000 Visitors/6 – 8 Visitors per Exhibit SF12,500 sf – 16,000 SF of Exhibits
Average = 8.6
Media = 6.4
Facility Size 12,500 SF – 16,000 SF of ExhibitsFacility SF = 2x – 3x Exhibit SF25,000 SF – 48,000 SF
Mid-Range =
35,000 SF for 100,000 Visitors
Hard Costs vs. Soft Costs
and Total Projects Costs
Hard Costs vs. Soft Costs
Construction and Fabrication
Hard Costs
• Base Building
• Construction
• Renovation
• Rental or Move-in
• Exhibit Fabrication and Installation
• Fabricator
• Volunteers
• Self-Build
Hard Costs vs. Soft Costs
Architecture and Exhibit Fees
Hard Costs
• Base Building
• Exhibit Fabrication and Installation
Soft Costs
• Architect/Engineering Fees
• 7% to 14% of Base Building Cost
• Exhibit Design Fees
• 25% - 30% of Exhibit Cost
Hard Costs vs. Soft Costs
Additional Owner’s Costs
Hard Costs
• Base Building
• Exhibit Fabrication and Installation
Soft Costs
• Architect/Engineering Fees ………. 7% to 14%
• Exhibit Design Fees ……………….. 25% - 30%
• Consultants – Legal, Survey, Geotechnical
• Furniture, Fixtures & Equipment FF&
• Management Costs
• Capital Campaign Costs
Hard Costs vs. Soft Costs
Contingencies and Allowances
Contingencies
• Owner’s – recommended 10%
• Cost Estimate – smaller as design progresses
• Contractor’s – included in bid
Allowances
• Start-up Operating Expenses - 25% to 50% of
annual operating expenses
• Inventory for Store (Cost of Goods Sold) – 50%
of estimated COGS for Year 1
ACM Quick Poll – 19 Museums That
Opened Between 2009-2017
Museum
Location
Context Opened
Pretend City Children's Museum Suburban 2009
Children's Discovery Museum (Saskatoon) Urban 2009
Mississippi Children's Museum Urban 2010
Kansas Children's Discovery Center Urban 2011
Terry Lee Wells Nevada Discovery Museum Urban 2011
Sacramento Children's Museum Suburban 2011
Bucks County Children's Museum Suburban 2012
Stellar Children's Museum (India) Urban 2012
Cheshire Children's Museum Rural 2012
St. George Children's Museum Suburban 2013
Wonderfeet Kids' Museum Rural 2013
Southern California Children's Museum Suburban 2014
Galveston Children's Museum Urban 2014
Santa Cruz Children's Museum of Discovery Suburban 2014
Central Wyoming Children's Center for Art,
Technology & Science (CATS) Rural 2014
Children's Museum of Findlay Rural 2014
Peoria PlayHouse Children's Museum Urban 2015
Knock Knock Children's Museum Urban 2017
Children's Museum of Curacao Suburban 2017
Number of Children’s Museums that Opened Per Year
Source: ACM and ConsultEcon, Inc.
ACM Quick Poll –
Total Cost Per Square Foot (SF)
Ranged from $3/SF to $673/SF
Museum
Location
Context Opened New/Renovate
Total
Square Feet
(SF)
Total Cost
to Open
Total Cost
Per SF
Mississippi Children's Museum Urban 2010 Built new 39,500 $26,600,000 $673
Knock Knock Children's Museum Urban 2017 Built new 26,000 $14,000,000 $538
Peoria PlayHouse Children's Museum Urban 2015 Renovate existing site 10,000 $5,000,000 $500
Kansas Children's Discovery Center Urban 2011 Built new 15,708 $7,500,000 $477
Terry Lee Wells Nevada Discovery Museum Urban 2011 Renovate 67,000 $19,500,000 $291
Pretend City Children's Museum Suburban 2009 Renovate 28,000 $7,028,439 $251
Children's Museum of Curacao Suburban 2017 Renovate existing site 4,000 $550,000 $138
Bucks County Children's Museum Suburban 2012 Renovate 5,000 $500,000 $100
Southern California Children's Museum Suburban 2014
Renovate an existing
site/store front 2,500 $223,500 $89
Sacramento Children's Museum Suburban 2011 Renovate 7,000 $500,000 $71
Stellar Children's Museum (India) Urban 2012 Renovate 10,700 $600,000 $56
Galveston Children's Museum Urban 2014
Renovate an existing
site 5,000 $150,000 $30
Santa Cruz Children's Museum of Discovery Suburban 2014 Renovate existing site 8,000 $199,000 $25
St. George Children's Museum Suburban 2013
Renovate existing site
(city-owned historic
building) 11,000 $250,000 $23
Cheshire Children's Museum Rural 2012
Moved into
renovated building 3,600 $50,000 $14
Children's Discovery Museum (Saskatoon) Urban 2009
Install new exhibits in
a mall space 1,900 $20,000 $11
Central Wyoming Children's Center for Art,
Technology & Science (CATS) Rural 2014 Renovate existing site 4,500 $46,000 $10
Wonderfeet Kids' Museum Rural 2013
Rent-free space
donated downtown 1500 $10,000 $7
Children's Museum of Findlay Rural 2014 Rent space in a mall 7,000 $23,000 $3Source: ACM and ConsultEcon, Inc.
ACM Quick Poll –
Total Cost Per Square Foot (SF)
Ranged from $3/SF to $673/SF
Source: ACM and ConsultEcon, Inc.
ACM Quick Poll –
New Construction $477- $673/SF
Kansas
Mississippi
ACM Quick Poll –
Renovation $71 - $291/SF
Pretend City
Sacramento
Nevada
Buck’s County
ACM Quick Poll –
Store Front $3 - $89/SF
Findley
Wonderfeet
Southern California
Central Wyoming
Santa Cruz
Percentage Split of Total
Development Costs
Source: ACM and ConsultEcon, Inc.
Average & Median Percentage Split
of Total Development Costs
of 16 Children’s Museums
Derived
Construction
& Other
Costs
Cap
Campaign
Expenses
Site
Acquistion
Site design /
Engineering
fees Exhibits Legal fees
Furniture,
fixtures,
equipment
Pre-opening
marketing
Office /
General
operating
supplies
Program
supplies
Average 45% 1% 1% 3% 37% 0% 6% 3% 3% 1%
Median 40% 0% 0% 2% 37% 0% 4% 1% 2% 0%
Source: ACM and ConsultEcon, Inc.
Total Development Costs
Feasibility Analysis
Administration
Fundraising and Financing
Legal
Marketing
Branding / Logo / Web Site
Business Planning
Project Management
Land Acquisition
Permitting
Building Construction
Architectural Design
Exhibit Design
Furniture, Fixtures & Equipment
Staff Recruitment, Training & Uniforms
Education
Management Information Systems / IT / Ticketing / Web Retail
Gift Shop fit-out and COGS
Food Service fit-out, if appropriate
Examples of When Executive
Director was Hired from ACM Poll
Museum Opened New/Renovate
When Executive Director Hired
(in months prior to opening)
Pretend City Children's Museum 2009 Renovate 4 years
Children's Discovery Museum (Saskatoon) 2009
Install new exhibits in a
mall space Still haven't (as of 2014)
Mississippi Children's Museum 2010 Built new 4 years
Kansas Children's Discovery Center 2011 Built new
Original team member transitioned
to ED
Terry Lee Wells Nevada Discovery Museum 2011 Renovate 13
Sacramento Children's Museum 2011 Renovate 2 months
Bucks County Children's Museum 2012 Renovate 12
Stellar Children's Museum (India) 2012 Renovate 12
Cheshire Children's Museum 2012
Moved into
renovated building 1 month (board member)
St. George Children's Museum 2013
Renovate existing site
(city-owned historic
building) 6 months
Wonderfeet Kids' Museum 2013
Rent-free space donated
downtown 0
Southern California Children's Museum 2014
Renovate an existing
site/store front
We don't have an Executive
Director, just Board of Directors and
staff
Galveston Children's Museum 2014 Renovate an existing site Founder became executive director
Santa Cruz Children's Museum of Discovery 2014 Renovate existing site
Volunteer executive director began
full-time 5 months before opening.
Central Wyoming Children's Center for Art,
Technology & Science (CATS) 2014 Renovate existing site
Founder functions as executive
director and director of education,
has PhD
Children's Museum of Findlay 2014 Rent space in a mall 2 months
Peoria PlayHouse Children's Museum 2015 Renovate existing site 6 months
Knock Knock Children's Museum 2017 Built new 10 months
Children's Museum of Curacao 2017 Renovate existing site 12 months Source: ACM and ConsultEcon, Inc.
Keys to Economic Sustainability
of a Children’s Museum
10. Offers Opportunities to Spend and Relax9. Offers Multiple Visit Opportunities8. Appeal to a Audience Mix (children and caregivers)7. Serves Residents and Tourists6. Outstanding Exhibits and Programs5. Depth of Visitor Experience Offered / Length of Stay / Attraction Content 4. Strong Thematic Focus3. Critical Mass of Attraction Elements2. Good Location and Site1. Established on Sound Financial Basis
Pre-Opening Experience &
Managing Donors
Panelist discussion with Esther, Rebecca and
Peter about their experience – Peter and Elena to
chime in as appropriate
Questions & Answers