Opinion: Financial projections for Bryan’s Regional Park overly optimistic, unreliable

When the election for Mayor of Bryan was going on, an interested area resident heard a clip from one of the debates that piqued his interest. Mayor Nelson mentioned, according to the resident who has given Brazos Reporter to reproduce his written words anonymously in this opinion piece, that he expects Bryan’s planned Regional Park to bring in “hundreds of thousands of visitors” and “[pay] for itself operationally within 4 years.”

“If you look at the EBITDA, [the Regional Park] makes money starting in year 4,” the resident quotes the mayor as stating. These statements let him know that “there was something floating around city hall that folks felt comfortable relying on.”

The resident asked and they gave him this document:

Bryan Regional Park – Indoor | Five-Year Operating Pro Forma | May 2019

Following, in the resident’s own words are issues and conclusions raised after careful review of the Regional Park pro forma financials:

  • As far as I can tell the economic impact does not account for diversion to College Station.
  • The EBITDA figure that Mayor Nelson seems to be talking about is a little under $80k in year 5, which I believe is when they figure the facility is hitting its stride.
  • Around $250k of the gross margin is supposed to be coming from a ninja warrior/ropes course facility with a Virtual Reality area.
  • This assumes 45,813 visits each year at $10 each
  • The Pro Forma assumes there will be around $120k in revenue from advertising/sponsorship
  • The Pro Forma assumes there will be 2 “Extra Large” volleyball tournaments each year with 1,280 players and 3,200 fans. That seems like a lot to me. I have no idea if this size of tournament is common. But it seems like it would be a lot to expect for the 15th largest metro area in Texas and a facility that is slated to have 600 parking spots and “Seating for at least 1,500 spectators.” The other tournament numbers are also listed on pages 12-14. These numbers look very optimistic to me. The Pro Forma does not show any benchmarking or other reality check to indicate these are reasonable.
  • It assumes there will be a little over $100k in alcohol sales. If I am reading the TABC figures right (https://data.texas.gov/d/naix-2893/visualization), this is on the order of what Johnny Carino’s or Embassy Suites did in 2018. That doesn’t seem unreasonable or anything, it just seems odd to me that the city is planning on getting into the bar business.
  • It looks like they expect the facility to be booked for 48 tournaments and 3 trade shows per year. If that means booking 51 weekends a year, I am skeptical.

The resident concludes, “Even with what seem to me to be very optimistic figures, they are talking about making around $80k per year before accounting for the capital costs of building the structure and the opportunity cost of whatever else they could do with that land.”

“The economic impact they come up with (ignoring rosy projections and apparent failing to account for diversion to CS), when you multiply them out by the tax rates, do not seem that impressive when you look at the amount they are planning to spend on this thing.”

In sum, “the numbers the Mayor is using to justify this are almost certainly overly optimistic and unreliable. And even the unreliable numbers he is relying on are not that good.”

The resident “also asked [the City of Bryan] for updated numbers or backup for these numbers…” Following are the additional documents the city provided when asked for updated numbers or backup for [the] numbers…” in the pro forma financials. “I suspect there is no backup/benchmarking to justify their figures,” the resident concludes, “but technically I do not know that for sure.”

Bryan Regional Park – Indoor | Five-Year Operating Pro Forma | June 2019

Bryan Regional Park – Indoor | Five-Year Operating Pro Forma | June 2019 | With final construction costs page and duplicate “Total Revenue & Expenses – Indoor Facility” page

Bryan Regional Park – Indoor & Outdoor Full Complex | Five-Year Operating Pro Forma | June 2019

Bryan Regional Park – Indoor & Outdoor Less 4-plex | Five-Year Operating Pro Forma | June 2019

The resident writes “I have not dug into these June ones in much detail. But they appear to have similar issues to what I found in that May 2019 Pro Forma.”

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