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FINANCIAL ANALYSIS were developed by Ellerbe Becket's cost estimator. The total hard cost estimates have been built into an overall development budget with a series of soft costs; include design and financing fees and owner -related project costs. It is assumed that the project will move into design in 2001, with the building reaching completion of construction and commencement of operations by the 2003 hockey season. Total development budget line items were compared against actual development budgets for completed minor league arenas for historically demonstrated accuracy. The complete development budget, showing both hard costs and soft costs, is listed on page 3 for each scenario of the financial model print-outs. It should be noted that development budget figures may not be considered actual cost estimates because specific design information has not yet been developed; however, it is believed that sufficient allowances have been provided for each line item to allow decision -making to proceed within acceptable budgetary constraints. Findings: Revenue Assumptions An arena generates revenue by the rental of the facility to event promoters or team owners (either a flat fee or a percent of gross ticket revenues), novelty and concession income, parking income, and advertising income. In addition, the building could potentially be able to generate supplementary revenues through the sale of the naming rights and the "pouring rights" for the facility. The majority of revenue streams correlate directly with the number of total spectators that enter the facility, which in turn, is dependent upon the number of events. These numbers can fluctuate heavily based on entertainment and sports market conditions, management of the facility, negotiated lease deals, outsourcing vs. in house operations, etc. The anchor tenant will be the greatest determinant of the level of revenues achieved by the facility, based on its success in attracting spectators and the terms negotiated in the tenant's lease agreement. These terms will determine the division of building revenues to the respective parties. For the purposes of this analysis, B&D has designated all revenue streams as "Arena Revenues' . These revenues include ticket seat service charges, naming rights income, parking, gate receipts, advertising, luxury suites, etc. In this analysis, these revenues constitute the primary source of funds from which the payment of the arena debt service and facility operational costs is derived. This analysis assumes that the arena revenues shall be pledged ( `income pledge") to service the facility debt and operational costs. In addition, this analysis assumes that the net facility revenues after the payment of debt service and operations represent. the revenue over which lease negotiations between the City and the anchor tenant shall be focused. Because the opening of the building does not precisely coincide with all sports seasons (such as hockey, which spans between calendar years), the actual revenues achieved in year one may vary from the percentages calculated. Y Brailsford & Dunlavey/Ellerbe Becket Page 37