John Stephenson, 39, is the president and CEO of Atlanta Hall Management, the not-for-profit organization formed to build and operate the College Football Hall of Fame here. In this interview, Stephenson — a native Atlantan with undergraduate and law degrees from Georgia — discusses the business aspects of the project.
Q: How many people must the Hall of Fame draw to break even financially?
A: Based on our current expense assumptions, the break-even floats around 380,000 visitors a year.
Q: What is your projected annual attendance based on the studies that were done by outside firms?
A: It's 500,000. That came from two separate studies done in 2009 and again in 2012. … That 500,000 is in Year 4 because we're pretty sure we won't have as many people come to our building ever as we do in the first two years. That's typical for an attraction: a peak when everybody wants to see it, then you fall off, then you level off. When we did our business model, we looked at our level-off attendance. That's the 500,000.
Q: Wouldn't 500,000 visitors annually make this the biggest-drawing sports Hall of Fame in the country?
A: I think it would.
Q: What makes you think this one can outdraw the Pro Football Hall of Fame (in Canton, Ohio), the Baseball Hall of Fame (in Cooperstown, N.Y.) and others?
A: Because it's in Atlanta and not Canton or Cooperstown or South Bend. We already know tourists and business travelers go to attractions around Centennial Olympic Park. … The model of a municipality building an attraction in an effort to draw tourism to their city is the total opposite of what we're doing. We're using a private enterprise — a non-profit private enterprise with private money largely — to build this attraction smack in the middle of an already very active tourism and business travel district. … The other big difference is it's easy to get to Atlanta, hard to get to South Bend (the College Football Hall of Fame's former home), hard to get to Cooperstown, hard to get to Canton. And none of those places and not even the NASCAR Hall of Fame in Charlotte are located near a venue that actually plays the sport on a regular basis. We are connected physically (through the Georgia World Congress Center) to the Georgia Dome and eventually the new stadium. Lots of football fans walk by our front door to get to the stadium. All of those things make me feel we can be the most attended sports hall of fame in the country because of our location.
Q: Other than the Dome’s game days, what do you expect attendance patterns to be throughout the year?
A: In our model, which goes monthly, we used an attendance distribution that is exactly what happens to the other attractions around us. Essentially, it's a bell curve where your shoulder periods are in the winter. You get a little bump around Thanksgiving and Christmas. In January and February, not that many people are going to attractions. From Memorial Day to Labor Day, with people traveling, that's when the lion's share of the attendance happens. We did have one advisor say that because college football starts when everybody goes back to school, you might enjoy a lift above the typical attraction model because your subject matter is happening during the fall and winter.
Q: The final cost of building the Hall of Fame is …
A: $68 million. That's start to finish, all soft costs, all people costs, all the studies, all the diligence and the construction and the exhibits. (Note: Not included in the $68 million is $15 million of taxpayer money that the state spent for an adjacent parking deck, road work and a new entrance into the Georgia World Congress Center from the front of the Hall of Fame building on Marietta Street. The Hall of Fame was built on GWCC property, a former parking lot.)
Q: Of the $68 million, $1 million came from the city. The rest had to be privately raised from corporate sponsors. How much of it is committed at this point?
A: We are a little north of 90 percent there. If we sell one more (major) sponsorship, which we are close on (as of this interview), then we'll be there.
Q: Before construction began, the project secured a loan of $22.5 million from three banks. When will that be paid off?
A: We will carry some debt to wait on (sponsorship) payments to come in over the next five years, max. … Every sponsorship deal that we did, some of the commitment was paid (up-front), and some comes later. … That (loan) is our float waiting on those payments to come in.
Q: Factoring out sponsorships, which go toward paying off the building in the first five years, what is the Hall of Fame’s annual operating budget?
A: (He downloads the budget onto his smartphone.) I'd use $11.5 million in revenue and $10 million in expenses. … Before that spread, we have a 5 percent reserve off of gross revenue for major improvements every three, four, five years. We took the advice of our consultants that you need to bake into your expense model a reserve for either a rainy day or a major capital improvement. … We want to pile the positive cash flow back in the building so we're constantly evolving and delivering on our promise that your second visit will be different from your first.
Q: What sources other than ticket sales make up the $11.5 million in projected revenue?
A: It includes the retail store — we outsource the retail and get a percentage off of their gross sales — and concessions, events and catering. We have a revenue share with the Omni (hotel) for catering events. … We modeled about 50 events a year, and we're going to beat that.
Q: How many events have you already booked?
A: We're at 30 for the rest of 2014.
Q: If revenue falls short, then what?
A: If we fall below break-even, then we will have to adjust our expenses, like any business.
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