GCG Gaming Business Plan

Great Canadian Gaming Corporation Page 1 of 35

Great Canadian Gaming Corporation

Business Plan 2011 - 2013


Table of Contents Executive Summary ................................................................................................................... 4 1.0 Business of the Company ..................................................................................................... 5 1.1 Business Summary & History ........................................................................................... 5 1.2 Industry Overview ............................................................................................................. 5 1.3 Current Situation of the Company ..................................................................................... 7 1.4 Goals and Objectives........................................................................................................ 7 1.5 Key Success Factors ........................................................................................................ 8 1.6 Structure of the Company ................................................................................................. 8

2.0 Product / Service Description ............................................................................................... 9 2.1 Detailed Description of Product/Service................................................................................ 9 2.2 Stage of Development of Product / Service ...................................................................... 9 2.3 Certification and Regulatory Standards Required ........................................................... 10 2.4 Customer Benefits Provided by Product/Service............................................................. 10

3.0 Market Analysis .................................................................................................................. 11 3.1 Target Market Profile ...................................................................................................... 11 3.2 Total Market Size ............................................................................................................ 11 3.3 Trends ............................................................................................................................ 12 3.4 Estimated Company Sales and Market Share ................................................................ 12 3.5 Rules of Purchase .......................................................................................................... 13

4.0 Competition ........................................................................................................................ 14 4.1 Direct Competitors – Present and Future ........................................................................ 14 4.2 Indirect Competitors – Present and Future ..................................................................... 15 4.3 Substitute Products or Services ...................................................................................... 15 4.4 Competitive Edge ........................................................................................................... 15 4.5 Competitive Analysis Chart ............................................................................................. 16

5.0 Marketing Strategy ............................................................................................................. 17 5.1 Positioning ...................................................................................................................... 17 5.2 Sales Strategy and Tactics ............................................................................................. 18 5.3 Advertising and Promotion Plans .................................................................................... 18 5.4 Advertising and Promotion Calendar .............................................................................. 19 5.5 Pricing Strategy .............................................................................................................. 20 5.6 Channels of Distribution .................................................................................................. 20 5.7 Public Relations and Publicity Plan ................................................................................. 20

6.0 The Management Team ..................................................................................................... 21 6.1 Key Management Team Profiles, Qualifications, and Responsibilities ............................ 21 6.2 Board of Directors ........................................................................................................... 22 6.3 Principal Advisors ........................................................................................................... 22

7.0 Operations .......................................................................................................................... 23 7.1 Location .......................................................................................................................... 23 7.2 Capital Equipment Requirements ................................................................................... 23 7.3 Labour Requirements ..................................................................................................... 23 7.4 Sources of Supply .......................................................................................................... 24 7.5 Production Process ........................................................................................................ 24

8.0 Implementation Schedule ................................................................................................... 26 8.1 Overall Schedule with Timelines ..................................................................................... 26 8.2 Potential Problems to achieving Deadlines ..................................................................... 28

9.0 Financial ............................................................................................................................. 29 9.1 Type and Amount of Financing Required ........................................................................ 29 9.2 Pro-forma Income Statement .......................................................................................... 30 9.3 Pro-forma Cash Flow Statement ..................................................................................... 31


9.4 Pro-forma Balance Sheet ............................................................................................... 32 10.0 Key Risks ......................................................................................................................... 34 10.1 External Environment Risks .......................................................................................... 34 10.2 Internal Environment Risks ........................................................................................... 34 10.3 Marketing Risks ............................................................................................................ 34 10.4 Human Resource Risks ................................................................................................ 34

11.0 Contingency Plans............................................................................................................ 35 11.1 Contingency Plan if Objectives not met......................................................................... 35 11.2 Contingency Plan if Objectives Exceeded ..................................................................... 35


Executive Summary Introduction Great Canadian Gaming Corporation is a multi-jurisdictional gaming and entertainment operator, which has successfully operated in locations across Canada and Washington State for the past 20 years. The Company has seen its most growth in the past 10 years, surpassing $400 million for the first time in 2008. River Rock Casino Resort is the company’s flagship location and its sales for the third quarter of 2010 has increased by $3.7 million, when compared to the third quarter of last year. With this location seeing an increase of 15,000 people each week with the recent completion of the Canada Line Skytrain in Richmond, BC, Great Canadian is planning to improve customer visits by leveraging the quality and quantity of shows offered at its 950-seat show theatre. The Market This business plan will outline the goals and strategies to generate an increase in River Rock customer visits for the 25-35 age demographic, which makes up approximately 28% of its market. This target is seen as attainable through the planned quality of the upcoming entertainment, and a growing reputation of the show theatre over the preceding years. The total size of this market in the Lower Mainland is approximately 181,860 people. Financial Considerations The Company is seeking to obtain loan financing for the amount of $500,000. This loan amount is expected to be repaid within 8 months and will produce a 112% ROI over a three year period. The following is the sales, expenses and profits for the show theatre sales.

2012 2013 2014 SALES $2.07M $3.62M $4.50M EXPENSES $1.74M $3.37M $4.00M PROFIT $0.33M $0.25M $0.50M This target is seen as attainable through the planned quality of the upcoming entertainment, and a growing reputation of the show theatre over the preceding years. This business plan will discuss the tactics and strategies to generate a significant increase in River Rock visits from its show theatre entertainment and implement a successful transition to a stronger entertainment destination in the Lower Mainland.


1.0 Business of the Company 1.1 Business Summary & History Great Canadian Gaming Corporation (Great Canadian) is a multi-jurisdictional gaming and entertainment operator. The company operates in British Columbia, Ontario, Nova Scotia, Canada and Washington State in the US. The Company operates ten casinos, a thoroughbred racetrack that offers slot machines, four standard bred racetracks, a hotel and conference centre, two show theatres, a community gaming centre, a bingo hall and various food and beverage and entertainment facilities. In Canada, it operates its casinos in managed markets with barriers to entry and under long-term agreements as partners with provincial lottery corporations. (Great Canadian Gaming Corporation, 2009) Great Canadian has been in business for approximately 30 years and the company's growth has taken place in the last ten years. The Company began operating temporary charity casinos in various locations in 1982, had expanded its operations in British Columbia by 1997 and in 1998 the charity casino system was replaced by government management and the British Columbia Lottery Corporation assumed oversight of all casinos in the province. Great Canadian listed its shares on Toronto Stock Exchange in 2004. The Company is headquartered in Richmond, British Columbia and employs approximately 4,500 people. (Great Canadian Gaming Corporation, 2009) 1.2 Industry Overview Major participants in the world gaming industry are: Harrah’s Entertainment, Inc. Harrah’s Entertainment is a privately owned company that owns, operates, or manages 52 casinos in 7 countries comprising the U.S., England, Scotland, Canada, Uruguay, Egypt, and South Africa. Its facilities had an aggregate of approximately 3 million square feet of gaming space and approximately 39,000 hotel rooms. The company was founded in 1937 and is based in Las Vegas, Nevada.Its casino entertainment facilities include land-based casinos, riverboat or dockside casinos, managed casinos, combination greyhound racetrack and casino, combination thoroughbred racetrack and casino, and harness racetrack and casino, as well as hotel and convention space, restaurants, and non-gaming entertainment facilities. The company’s properties operate primarily under the Harrah’s, Caesars, and Horseshoe brand names. It also owns the World Series of Poker tournament and brand. Harrah’s 2009 revenues and net income respectively were $8,9074 Billion and $827.6 Million. (Bloomberg Businessweek, 2010)


MGM Resorts International MGM Resorts International is a publicly traded company that owns casinos in 3 countries. MGM owns 17 casinos in the US, six of these in Las Vegas as well as one casino in China. MGM also owns hotel properties in Dubai. Their 2009 revenues and net loss respectively were $5.979 Billion and -$1.292 Billion. (MGM Resorts International, 2010) Las Vegas Sands Corp. Las Vegas Sands Corp is a publicly traded company that owns eight casinos in three countries. Of the US properties, three are in Las Vegas, and one property is in Pennsylvania. Three of the remaining properties are in China, and the last was recently opened in Singapore as of April 2010. Their 2009 revenues and net loss respectively were $4.929 Billion and -$368.7 Million. (Las Vegas Sands Corp., 2010) Penn National Gaming, Inc. Penn National Gaming owns 24 casinos in total. In the US, Penn National has 15 casinos, four racetracks with slot machines, seven horse racetracks, and five locations for off track wagering. Penn National also has one casino in Ontario, Canada. Their 2009 revenues and net loss respectively were $2.369 Billion and -$267.4 Million. (Penn National Gaming, Inc., 2010) Ameristar Casinos, Inc. Ameristar is publicly traded and owns seven casinos in the US. Their 2009 revenues and net loss respectively were $1.215 Billion and -$4.667 Million. (Ameristar Casinos, Inc., 2010) Boyd Gaming Corporation Boyd Gaming is publicly traded and owns 15 Casinos in the US. Seven of the casinos are located in Las Vegas, two in Atlantic City, one in Illinois, one in Indiana, three in Louisiana, and one in Mississippi. Their 2009 revenues and net income respectively were $990.6 Million and $108.2 Million. (Boyd Gaming Corporation, 2010) The gaming industry in Canada is composed of sales from betting and gaming forms such as bingo, lottery, pari-mutuel (horse racing), and slots and from casino table game activities (excluding online activities). Canadian Gaming Industry The gaming industry in Canada is composed of sales from betting and gaming forms such as bingo, lottery, pari-mutuel (horse racing), and slots and from casino table game activities (excluding online activities). The Canadian Gaming Industry is a 15.34 billion dollar industry, which has grown by 50% over the past 10 years. Great Canadian operates in the provinces of British Columbia, Ontario and Nova Scotia, which account for 13%, 35.7% and 2.6% of the Canadian Gaming Industry respectively in 2009. (HLT Advisory Inc., Canadian Gaming Industry Overview, July 2010).

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1.3 Current Situation of the Company The Great Canadian Gaming Corporation has seen strong revenues of $382.2 million in 2009. This is substantial growth since 2000, where revenues were $54.3 million. Revenues in 2008 were $403.7 million and 2009 was the first time in the past 10 years that revenues have declined. The Great Canadian Gaming Corporation sees a steady increase in quarterly revenues with the first quarter starting in January being the lowest in revenues and the last quarter ending in December having the highest revenues. This economic slowdown for the company in 2009 has caused a reduction in revenues and so The Great Canadian Gaming Corporation had to “take a conservative approach toward capital deployment. Certain projects have been deferred, and revised timelines for their development will not be issued until greater clarity is available around future market conditions.” (Corporation, 2010) Currently the revenues for the first six months of 2010 are $190 million, which is on track to mirror 2009. The first six months of 2009 had revenue of $189.9 million with table games and slot machines generating 27% and 42% of revenue respectively. Revenues at River Rock Casino Resort for the first three quarters of 2010 increased by $3.7 million from 2009. (Digital Journal, 2010) The Great Canadian Gaming Corporation will be adding additional rooms to the River Rock hotel. “The Company will be adding additional rooms to the Rock Rock’s hotel. “This five-storey tower will add 193 rooms to River Rock's hotel capacity, and create an additional driver for both hospitality and gaming volumes at the property. We anticipate opening this tower during the fourth quarter of 2011, and that completing its construction will require further costs of approximately $26.0 million.”Ross J. Mcleod,http://www.digitaljournal.com/pr/159207#ixzz15gV8msHx, November 10,2010 1.4 Goals and Objectives The Great Canadian Gaming Corporations goal is to increase the amount of visitors for 2010 at the River Rock Casino. The objective is to obtain a loan of $500,000 from a financial institution to bring in high profile and local comedians and musicians to increase the amount of visitors of a younger demographic by 10% (Statistics Canada, Perspectives on Labour and Income, Gambling, July 2009). With many newly renovated or newly built facilities The Great Canadian Gaming Corporation can use these new expanded facilities to increase the number of visitors aged 25-35. The variety of entertainment will be targeted to a younger demographic with current,trendy acts being featured. A greater amount of advertising will be featured to inform the public of the new current entertainment.

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The 25-35 age demographic accounts for approximately 28% of the gambling demographic. (Statistics Canada. Perspectives on Labour and Income, Gambling, July 2009.) This accounts for $28.8M of Great Gaming’s annual sales of $102.9M (2009 annual gross sales). Therefore a $3M increase in sales results in a 10% increase in total River Rock sales derived from the 25-35 aged demographic. 1.5 Key Success Factors The Great Canadian Gaming Corporations key success factor has been the lack of competition. This is due to the fact that Crown corporations responsible for gaming have taken steps to limit the amount of gaming facilities in Canada. Key success factors for the future will be to increase the diversity of the entertainment that The Great Canadian Gaming Corporation provides to attract a larger range of demographics. 1.6 Structure of the Company The Great Canadian Gaming Corporation is a Corporation and is publicly traded on the Toronto stock exchange. Ross J. McLeod is the CEO with 30 years of experience in the hospitality industry. Ron N. Baker is the newly appointed President as of May 2010. Milton Woensdregt is the Chief Financial Officer with 27 years of senior accounting and management experience. Earnest C. Beaudin is the Lead Director and Joanna Brierley is the Secretary of the Executive Board.


2.0 Product / Service Description

2.1 Detailed Description of Product/Service The services River Rock Casino through their River Rock Show Theatre are concerts and shows with the use of their River Rock Show Theatre. River Rock will reach out to numerous music artists and comedians and book them to perform at their theatre. The theatre is 21,000sq ft and can seat 950 people and River Rock is focusing on bringing in music acts that are either local, established or starting to make a name for themselves. The comedic acts will be well known and have done shows in throughout North America and the rest of the world. The company will book music and comedy artists such as examples listed below. Music Artists Comedians Bruno Mars Margaret Cho Aegis Fang Anjelah Johnson Brandon Flowers Russell Peters Far East Movement Aziz Ansari Ivana Santilli Chelsea Handler Great Canadian offers gambling and gaming services through the following operations: ten casinos, a thoroughbred racetrack (with slot machines), three standard bred racetracks (two offer slot machines and one offers both slot machines and table games). They also have two show theatres, a community gaming centre, a hotel & conference centre, a bingo hall, and various associated food and beverage and entertainment facilities. 2.2 Stage of Development of Product / Service The development of the theatre location is a finished product. The River Rock Show Theatre is a 21,000 square foot entertainment venue that features a state of the art seating system that can transform the theatre into different layouts such as a convention/meeting room. River Rock will be booking more acts to increase the usage of the theatre. As more customers come to the theatre due to the performer, more awareness will be developed leading to a better overall impression of River Rock.


2.3 Certification and Regulatory Standards Required Each province has a Crown Corporation in charge of gaming and regulating the industry. The Great Canadian Gaming Corporation also operates in Washington where the industry is regulated by the Washington State Gambling Commission. British Columbia has the British Columbia Lottery Corporation which conducts and manages lotteries, casinos and commercial bingo halls. It oversees all gaming services providers and gaming workers, B.C.'s horse racing industry and licensed gaming events. The Branch also manages responsible gambling programs and manages the distribution of gaming funds received by organizations. (BCLC, 2010) Ontario is governed by the Ontario Lotto and Gaming Corporation (OLG, 2010) manages lotteries, casinos, and horse racing. Nova Scotia is regulated by the Nova Scotia Alcohol which manages alcohol and gaming licenses in the province. (Province of Nova Scotia, 2010)

2.4 Customer Benefits Provided by Product/Service Great Gaming Casino’s flagship location, River Rock Casino, currently offers a high level of convenience to its market with free parking and Canada Line Skytrain transportation access. With the requested raising of $500,000 Great Canadian will offer an increase in quality and frequency in its show theatre entertainment for the younger demographics of men and women aged 25-35. Show Services These shows will provide high levels of “newness”, excitement and entertainment to this market through celebrity and current popular musicians and comedians. It will offer new improved shows that this venue has never offered and an increase in frequency of its popular entertainment. The Company will sell an attractive package with its show theatre tickets, coupling it with slot machine credit and a free drink. This will encourage show participants to enter the other areas of the casino after each show and purchase gambling services. Gambling Services River Rock Casino offers some of the most modern, quality gambling products such as slot machines, card games, food and drinks and service in the Lower Mainland. The November 19, 2009 completion of various upgrades at the facility has lead to an extensive slate of enhancements. Despite the weakened economy, these redevelopments combined to generate significant improvements in visitation, table drop, and slot coin-in at the facility during the fourth quarter of 2009. (Annual report, 2009)


3.0 Market Analysis

3.1 Target Market Profile Primary Market New shows intended to attract younger demographics. Currently shows are geared towards an older demographic with a list of current shows including “Retro Rock, Orient Expressione, and Kenny Rogers” (Rock, 2010). River Rock will be going after a local younger demographic of men and women aged 25-34 with the new list of performers. The geographic reach of River Rock Casino is larger than other casinos due to its unique location, situated right at a skytrain station allowing for easier transportation than any other show theatre or casino in the lower mainland. The psychographic of the target market is that they have an interest in new current music and standup comedy, as well as they do not see a casino in a negative manner. There are many other entertainment options available to the target audience and a large marketing campaign and well known celebrities will be used at the beginning of the target market shift to get the audience to become interested enough to purchase.

3.2 Total Market Size “The 21-to-40 gambling crowd has become a growing, lucrative market that will grow even stronger with the right attention.” Dennis Conrad, Associates, R. K. (2010). Casinos gaming and wagering. Harrah's Entertainment, Casino Journal. This market is growing with 71% of casino executives participating in a survey conducted for a recent industry trade show say they expect resorts to redesign themselves with young patrons in mind. (Associates, 2010) Currently the age range of 25-44 accounts for 33% of the population in the Lower Mainland based on 2006 census data accounting for a total of 379,541 people. From 2001 to 2006 the population of the lower mainland increased their casino spending from $198 per household to $239 per household. It is becoming more socially acceptable to go to a casino in the lower mainland, and based on a survey done by Harris interactive 40% of Americans are planning on attending an entertainment activity or show at a casino in the next 12 months. Goodwin, T. (2006, 07 07). Statistics from extensive casino gambling poll. Retrieved from Casino Gambling Web: http://www.casinogamblingweb.com/gambling-news/casino-gambling/statistics_from_extensive_casino_gambling_poll_released.html


3.3 Trends Increase in Traffic Due To Canada Skytrain As part of a $30 million Canada Line Skytrain renovation in Vancouver, gamblers and other visitors can now gain easy access to River Rock Casino off at the Canada Line's Bridgeport Station and walk directly to the casino via a new covered walkway to the resort's third floor. Once in the resort, customers take the spiral escalator that drops them on the doorstep of dozens of slot machines and gaming tables. This Canada Line access has provided River Rock Casino with an extra 15,000 extra customers each with and a 15% increase in guests. Management has reported that the majority of their guests now come from the Canada Line. These guests include older demographics from Oakridge, Kerrisdale, Yaletown and younger crowd as they can drink and not have to drive. The increased drinking and driving restrictions in British Columbia could also encourage a further increase in traffic to the casino. (Morton, 2009) Entertainment at Casinos In a 2006 poll, among those who say they are at least somewhat likely to visit a casino in the next 12 months (49%), 40 percent are planning on attending an entertainment activity/show. The poll also showed that people are seeking for more of an entertainment experience when visiting a casino to gamble. (Goodwin, 2006) Socioeconomic trend Currently there is a decline in younger gamblers as the number of gamblers aged 19-34 has decreased from 57% (1992) to 42% (2008). River Rock Casino hopes to capture this declining demographic with an increase in quality music and comedy entertainment. (SOURCE: Statistics Canada. Perspectives on Labour and Income, Gambling, July 2009.)

3.4 Estimated Company Sales and Market Share To forecast the three years of sales in theatre tickets sold, River Rock will assume that during the first year they will be selling 60% of seats available, 75% for the second, and 90% for the third year for their normal shows. As for the high profile shows, 10% of the seats will be reserved for VIP tickets and 90% for regular price. The goal is to have a show every weekend (Friday, Saturday, and Sunday), and start off with having two high profile performers in year one and increase by two every year. Each high profile file performance will consist of three concerts. The table below shows the expected sales and shows.


Year 1 Year 2 Year 3

# of Concert

s Sales

# of Concert

s Sales

# of Concert

s Sales

High Profile 6

$ 627,163.08 9

$ 940,744.63 12

$ 1,254,326.1

7

Normal

Shows 35 $

714,154.58 105

$ 2,678,079.6

9 105

$ 3,213,695.6

3

Totals

$ 1,341,317.6

7

$ 3,618,824.3

1

$ 4,468,021.7

9

3.5 Rules of Purchase River Rock Casino customers require the live shows to appeal to their demographic, and must perceive gambling after the events to be desirable and socially acceptable. They require easily accessible and affordable parking, with the casino being within 30-60 minutes driving distance. Customers who choose to gamble must also perceive their odds of winning to be fair (BC Responsible Gaming)


4.0 Competition 4.1 Direct Competitors – Present and Future Present Competitors Other live entertainment venues with shows on the weekends such as the Orpheum, Queen Elizabeth Theatre, and the Vogue Theatre would be in direct competition with the River Rock Show Theatre. All of these theatres are located in downtown Vancouver with seating capacities ranging from around 1,000-2,900. The Orpheum has 2,780 seats and positions itself through a variety of shows. It showcases the Vancouver Symphony, Opera, rock concerts, and stand-up comedians. The Queen Elizabeth Theatre has 2,781 seats and positions itself by showcasing ballet, opera, orchestra, and theatre productions at its venue. The Vogue Theatre has 1,144 seats and positions itself through having rock performances such as The Trews and Bedouin Soundclash. Stand-up comedians such as Bob Saget, and local bands perform at the Vogue. Other gambling facilities in the Lower Mainland are in direct competition with River Rock such as Edgewater Casino located in downtown Vancouver. The Edgewater Casino has a 430 seat show theatre that is positioned mainly towards video events with an 18ft tall high definition projection screen and a state of the art surround sound system. The Grand Villa Casino located in Burnaby has a restaurant lounge area with a big screen television for watching sporting events. The Starlight Casino located in New Westminster has a sports bar with 120 video screens which attract customers to watch sporting events. Cascades Casino located in Langley has a 420 seat theatre with large high definition video screens for sporting events. Live performances mainly consist of jazz, blues, and R&B. Future Competitor There is a casino planned for downtown construction to replace the Edgewater Casino and be three times the size. It is currently expected to be finished by 2013. This new casino has yet to be named and is going to be positioned as a Vegas style destination casino. (Rockel, 2010)


4.2 Indirect Competitors – Present and Future Online Gambling The online gaming industry has grown from $87M (2002) to $4.7B (2010). By 2014 online gambling is expected to grow to over US$7B. Examples include online poker, etc. ( iGaming Business) Clubs and Smaller Venues Many acts prefer this medium since it costs less and there is not as much set up costs. The artist can do a shorter show and tickets are usually cheaper than going to an actual theatre for the customer. YouTube and Video Upload Sites Almost anything can be found on the Internet and many people will wait for a concert or show to be uploaded online rather than pay to watch. A lot of previous shows of the artist or comedian will be posted on YouTube so only loyal fans will pay to watch their shows. DVD’s and Blu-Ray Many artists and acts have their concerts come out in these mediums. Rather than pay a higher price for a ticket, customers will wait for a DVD or Blu-Ray to come out than go to a concert where they it may be too noisy or the crowd can have unexpected behavior. With Blu-Ray quality, it can be almost as if you’re at a concert. 4.3 Substitute Products or Services For the casinos and gaming sector as a whole, almost any leisure activity can act as a substitute, which can be taken up with minimal switching costs and may also be cheaper than gaming for consumers. Aside from cost advantages, some customers may value social aspects of using non-gambling forms of gaming facilities. The threat of substitutes in this sector is strong. (Source: Datamonitor, United States - Casinos & Gaming, March 2010) 4.4 Competitive Edge River Rock Casino’s floor is open 24 hours a day and 7 days a week. Theatre shows are more intimate with a smaller theatre when compared to large venues such as Rogers Arena, and The Pacific Coliseum. River Rock Casino has the largest show theatre out of all the casinos in the lower mainland allowing them to attract larger performers. River Rock is able to give value for the consumer due to the lower ticket price when compared to similar sized venues since the majority of the casino’s revenues come from slots machines and table games. This allows the casino to reduce the ticket price to bring in more consumers to use its gambling facilities enticing them with a free $5 gaming chip with the purchase of a theatre ticket.


Any new company attempting to enter this sector would require large amount of capital to set up a casino, employ staff and acquire gaming equipment. However, the willingness of customers to switch from one gaming company to another and easy access to suppliers are conductive to the entry of new players. The likelihood of new entrants to this sector is assessed as a moderate overall. Datamonitor. (2010). Great Canadian Gaming Corporation. New York: Datamonitor. The strong barriers to entry to the gaming industry in Canada have assisted in the growth of Great Canadian Gaming Corporation due to reduced competition. (Corporation, 2010) 4.5 Competitive Analysis Chart Comparing casinos that compete with River Rock that also have show theatres.

Edgewater Casino River Rock Cascades Casino

Show theatre 430 950 seats 420

# Hotel Rooms 0 220 (193 more to be added end of 2011)

77

Restaurants 2 5 3

Gaming space 30,000sq ft 70,000sq ft 50,000sq ft

Parking spaces available

Underground valet parking

1,200 spaces in a large multilevel structure

Large outside patrolled parking area

Ease of Access Drive or two block walk from Stadium skytrain station

Drive or casino is located at Bridgeport skytrain station on the Canada line

Must drive or bus with one bus route to the location

Pool N/A Yes N/A

The River Rock Casino has the largest show theater when compared to its main casino competitors. The River Rock Casino has the highest amount of amenities and largest gaming space for patrons to utilize after viewing a performance.


5.0 Marketing Strategy 5.1 Positioning

River Rock offers competitively priced, high quality musical and comedy performances as a pull strategy to attract the 25-35 aged market in Lower Mainland. They offer a wide variety of additional services for its clients to enjoy including food, drinks and gambling. River Rock also encourages the use of these services by offering a free alcoholic drink and slot or table game credit with the show ticket. The customers will perceive the theatre’s entertainment as high quality and relatively comparable to shows offered downtown as an example, yet at a lower price. River Rock is positioned as one of the most high class gambling establishment in the Lower Mainland. This is reinforced with the company’s recent upgrades to the facility and focus on high quality service.


5.2 Sales Strategy and Tactics The success of this marketing strategy is reliant on advertising and promotion efforts, which will be discussed in detail in the following section. 5.3 Advertising and Promotion Plans The primary strategy is to use the show theatre to bring in more guests onto the casino floor by adding incentives such as free drinks and a $10.00 credit that can be used for table games or slot machines with every ticket purchased. These tickets must be redeemed on the same date of the performance. Sales Promotion In order to bring more guests onto the casino floor, River Rock Show Theatre will be including a free drink and free credits for the slot machines or table games. At the end of every performance, the performer will remind the guests to use their free drinks and credits that come with the ticket and encourage them to continue their night at the casino. This reminder at the end of each performance will be included in each performer’s contract. Social Media River Rock will be using social media to promote the new shows they are presenting through the means of Facebook and Twitter. These pages will display information about what kind of shows are up coming and when they will be presented. On these pages there will also be information about “What to do after the show” that will explain with each ticket purchase they will receive a free drink, and a $10.00 credit that can be used for either table games or slot machines. Newspaper River Rock will promote their upcoming shows with advertisements in the local daily Metro Vancouver newspapers, 24, and the Georgia Straight, which have a combined readership of 95,800. The advertisements will feature the date of the show, details of the sales promotion included with the show, as well as a call to action to both where the ticket can be bought and the casino website. (Advertise. (2010, September). Retrieved from Metro Vancouver: http://www.metronews.ca/vancouver/advertise) (Straight Facts. (2010). Retrieved from Georgia Straight: http://www.straight.com/straightfacts) Newspaper advertisements will run every day for a week before the show, from Monday to Friday. The advertisements will be a 40 line banner in each newspaper. This will total to a monthly cost of $11,720 for promoting Class A performances and a cost of $5,860 per month for promoting class B performances.Metro Vancouver, 24 Hours (Vancouver), and Georgia Straight. (2010, January 1). Retrieved from Card Online: http://cardonline.ca/

http://www.metronews.ca/vancouver/advertise


Transit River Rock will be using transit advertisements to promote their upcoming shows through both sky train station advertisements as well as in-train banners. There will be 15 advertisements each of vertical and interior cards and platform poster advertisements at 8 Class A Skytrain stations. The Class A Skytrain stations include Burrard, Granville, Broadway and Metrotown, all of which have high foot traffic, and will therefore generate the most awareness for the shows. Each interior card will cost $41, vertical cards will cost $109, and platform posters will cost $616 and will cycle for the 4 weeks prior to the show.Translink. (2010). Products and Rates. Retrieved from Vancouver Transit Advertisment: http://www.vancouvertransitadvertising.com/dev/wordpress/products-and-rates/ 5.4 Advertising and Promotion Calendar

Strategy Tactic / Vehicle Description Why Useful? Timing

Social Media

Facebook Twitter

Run update on Twitter and Facebook daily.

Facilitates the artist’s current method of promotion

Daily twitter updates, regular, weekly Facebook pasts. Beginning April 2012

Newspaper

Metro Vancouver Vancouver 24 Georgia Straight

There will be banner ads placed that will promote the up-coming performances, in the entertainment section.

There will be Metro and 24 newspapers that are distributed on the sky train that will have a very large reach.

These advertisement will be starting in April 2012

Sales Promotion

In performers contracts

Each performer will end their show by advising the audience to visit the casino floor

This will add an incentive to visit the casino floor after the performance

At the end of every performance.

Transit Advertising

Advertising at 8 stations and 30 in train poster ads

Posters displaying the upcoming shows at River Rock

River Rock Casino is located on the Canada line route

Starting in April 2012 with double promotions before class A performances


The first show will be May 6, 2012, and will act as a premiere for River Rock’s new upgraded show theatre. There will be two large performers in Year 1 (May 6, 2012 - May 2013), the first one being May 6, 2012. Each large performer will do three shows. In addition to these special shows, River Rock’s show theatre will feature 1-2 shows per week of trendy local musicians or comedians which are popular with the 25-35 age demographic. In Year 2 River Rock plans to increase its number of special celebrity performers to three, and four performers in Year 3. The special shows will feature a celebrity musician or comedian such as Chris Rock. 5.5 Pricing Strategy The pricing strategy that River Rock Show Theatre will be using will be a competition based. Prices will be set lower than the competitors because River Rock will be trying to attract the audience to the casino floors after each show. The price for low profile tickets will average around $35.00, high profile performers will average around $75.00 and VIP will be priced higher at $440.00 a ticket. 5.6 Channels of Distribution To attend River Rock’s shows and concerts, the targeted customers will have to purchase tickets. River Rock uses Ticketmaster for all their shows at the theatre so that will not change for the new acts that they will be bringing in as mentioned in section 2.1 of the business plan. Customers can purchase tickets at a physical Ticketmaster store or online at www.ticketmaster.ca and print out a paper copy of the ticket. It’s the same thing as an actual ticket with the seat number, authenticity bar code, name of the concert or artist and time and place of the event. Being able to print it is for the convenience of the customer if they do not have the time to go to a physical store. 5.7 Public Relations and Publicity Plan The River Rock Casino will keep investors informed through bimonthly newsletters which will highlight upcoming shows, expected profits and traffic as well as success points from past shows. The publicity for these shows will be done through articles in the entertainment section of local Metro Vancouver newspapers. These articles will profile local artists and their upcoming show dates at the River Rock theatre.

http://www.google.com/url?q=http%3A%2F%2Fwww.ticketmaster.ca%2F&sa=D&sntz=1&usg=AFQjCNG82RaNbasX42ezlbLlZYVS0RDiGA








6.0 The Management Team 6.1 Key Management Team Profiles, Qualifications, and Responsibilities The following are the profiles of the Key Management Team, along with their qualifications, and responsibilities sourced from the Great Canadian Gaming Corporation website. Director Executive Chairman, Chief Executive Officer - Great Canadian Gaming Corporation Ross J. McLeod Ross J. McLeod has over 30 years of experience in the hospitality industry and served as a Divisional Director of Operations for the Pacific National Exhibition. An acknowledged expert in community charity gaming and a respected and major contributor to British Columbia's current regulatory framework for casino gaming, Mr. McLeod is responsible for the evolution of the charitable gaming industry in British Columbia. In 1999, Mr. McLeod was recognized by his peers for his industry leadership and awarded Canada's most prestigious gaming award, the Outstanding Contribution to the Canadian Gaming Industry Award. Ross J. McLeod. (2009). Retrieved from Great Canadian Gaming Corporation:

http://www.greatcanadiancasinos.com/overview/governance/ross_mcleod.aspx Director, President Great Canadian Gaming Corporation Rod N. Baker Mr. Baker is the President of Great Canadian, a position he has occupied since March of 2010. Prior to assuming this role, Mr. Baker served as a consultant to the company from June of 2008. In his capacity as a consultant, Mr. Baker was responsible for developing and implementing the efficiency improvement initiatives that allowed Great Canadian to remain both profitable and competitive during the global economic recession. Prior to joining Great Canadian, Mr. Baker worked in the field of merchant banking, both managing and investing in private and public companies throughout North America. Mr. Baker’s background also includes various roles with several large Canadian based investment dealers. Rod N. Baker. (2009). Retrieved from Great Canadian Gaming Corporation:

http://www.greatcanadiancasinos.com/overview/governance/rod_baker.aspx Lead Director Great Canadian Gaming Corporation Earnest C. Beaudin A member of the Law Society of British Columbia, Mr. Beaudin was one of the founding partners of the Vancouver law firm Alexander Holburn Beaudin & Lang. Mr. Beaudin left the firm and private law practice in 1986 to become the President, Chief Executive Officer and General Counsel of Decker Management Ltd. Decker Management Ltd.'s primary focus is healthcare


issues while Decker Construction Ltd. is principally involved in residential development and construction. Mr. Beaudin continues to hold the position of President and CEO of both divisions. Earnest C. Beaudin. (2009). Retrieved from Great Canadian Gaming Corporation:

http://www.greatcanadiancasinos.com/overview/governance/earnest_beaudin.aspx 6.2 Board of Directors The Board of Directors consists of Earnest C. Beaudin, Brian E. Egli, Larry Campbell, Peter Meredith, Adrian R. Thomas, Ricahrd S. Buski, Thomas W. Gaffney, and David L. Prupas. Directors and Officers. (2009). Retrieved from Great Canadian Gaming Corporation:

http://www.greatcanadiancasinos.com/overview/governance/ 6.3 Principal Advisors For booking talent, artists and comedians, River Rock will be affiliated with the following firms and companies: William Morris Endeavor Entertainment – http://www.wma.com Creative Artists Agency - http://www.caa.com/ International Creative Management - http://icmtalent.com/ United Talent Agency - http://www.unitedtalent.com/ The agencies listed above are known as the “big four” who dominate the entertainment industry. They have hundreds of agents globally, and own the rights to numerous mediums. These agencies represent a large portion of the entertainment world, from television, commercials, musicians and sports figures.

http://www.google.com/url?q=http%3A%2F%2Fwww.wma.com%2F&sa=D&sntz=1&usg=AFQjCNHBlOHwOhYYDsS3S1-3X6A2mHToEg








http://www.google.com/url?q=http%3A%2F%2Fwww.caa.com%2F&sa=D&sntz=1&usg=AFQjCNHFIAb_UVNud0vSh7u--xQamspOxg









http://www.google.com/url?q=http%3A%2F%2Ficmtalent.com%2F&sa=D&sntz=1&usg=AFQjCNHgFve0CEHrWxwX2K5sYB5YQBvBYQ







http://www.google.com/url?q=http%3A%2F%2Fwww.unitedtalent.com%2F&sa=D&sntz=1&usg=AFQjCNFIao0x-2p3BVya30Xnq3CJBjCdJg










7.0 Operations 7.1 Location River Rock Casino Resort is located on 8811 River Road Richmond, British Columbia. The office space for the marketing and promotions employees for the show theatre will be set up at the head office location at 350 - 13775 Commerce Parkway Richmond, British Columbia. This will allow for ease of communication and transportation between the marketing managers and River Rock staff. 7.2 Capital Equipment Requirements Office Space Office equipment is required for two new employees. The current office has phone and Internet connection established; therefore the new employees only require computers and work space. Theatre Each artist requires different equipment to perform at the show theater. River Rock provides the basic equipment for the venue. If an act has any special requirements for their show, they will provide their own equipment to fulfill these needs. 7.3 Labour Requirements Marketing Two marketing managers will be hired to run the new marketing campaign for the show theatre. These two employees will be experienced in creating and running a marketing campaign. Their pay will be based on the industry average for a marketing coordinator with a starting salary of $70,614 with bonuses and pay increases based on performance. Pay scale. (2010). Pay scale Canada. Retrieved from Pay scale: http://www.payscale.com/research/CA/Job=Marketing_Communications_Manager/Salary The Show Theater Increased staff will be required for the show theatre since it will be operating at a higher than normal capacity and frequency. These staff will be part time and paid an hourly wage of $13 per hour. The increased attendance of the show theatre during the weekends will require the hiring of additional table staff or adding hours to the table game employees current schedule.


7.4 Sources of Supply Ticketmaster – the show theatre tickets will be supplied from Ticketmaster. The prices for the show will vary depending on the performer. In addition to ticket price there will be other costs such as service charge, building facility charge, processing charge and shipping or e-ticket convenience charge. Management will not be using any other ticket distributors other than Ticketmaster. River Rock will track ticket sales to compare with promotion usage and casino sales. The “Big 4” talent agencies – William Morris Endeavor, Creative Artists Agency, International Creative Management and United Talent Agency will be River Rock’s source for booking talent and shows. River Rock chose the Big 4 as they are amongst the largest agencies in North America and provide access to a wide variety of performers. The Big 4 are located globally and prices vary depending on the talent, location, and amount of shows requested. 7.5 Production Process

Contact Agency – River Rock’s marketing team will have a list of comedians and music acts that they want to have performing at the theatre. The list will be separated with Class A and Class B performers. Class A are celebrity-level performers that are more established or command a higher fee or arrangements. Class B are performers that are on the rise or local acts that have a steady, existing fan base. River Rock will contact the “Big 4” talent agencies to book talent and see who’s available. Negotiations – River Rock will contact the agent of the performer they want booked and ensure the availability of the performer will coincide with the theatre’s schedule as to avoid conflicts.

Contact Agency

Negotiations

Advertising and

PromotionTalent Arrival

Set-up and show


Cost of performer, accommodations, number of shows and length of shows will all be negotiated and completed before the next step commences. Advertising and Promotion – Once both parties have agreed on negotiations. River Rock and the performer’s marketing team will devise an advertising and promotion plan. Costs and magnitude of advertising will vary depending on the performer. River Rock will use social media and newspaper and transit advertisements to promote upcoming shows. Tickets will be sold at Ticketmaster outlets or on Ticketmaster.ca. Talent Arrival – Once the performer and the agent arrives, River Rock Resort will provide accommodations at the River Rock Casino Resort. The River Rock marketing team will discuss with the performer on songs that they will perform on the night of the show and if it’s a comedian then the topic of material they will perform. Set Up and Show – River Rock staff will assist in theatre stage set up, according to the performer. After a couple of practice rehearsals, the performance will begin later on that evening or the next day.


8.0 Implementation Schedule 8.1 Overall Schedule with Timelines The following will outline a general schedule for Class A and Class B music and comedy performers at the River Rock show theatre venue. Each Class A performer is scheduled for three consecutive shows. Each Class B performer is scheduled for two shows performing on Friday and Saturday night. In the case a performer cancels or is unable to perform, management will maintain a small number of Class B performers able to step in on short notice. Shows will be scheduled such that they avoid conflicts with large Vancouver events, such as playoff hockey games and large concerts at Rogers Arena in order to maximize show attendance. Each month The Company will raise awareness and create “buzz” through advertisement and promotions one month in advance of upcoming shows. April 2012 Advertise and promote upcoming entertainers for May 2012 and increase the quality and quantity of shows at the River Rock’s show theatre venue. May 2012 Class A: 3 shows Class B: 6 shows June 2012 Class A: 0 shows Class B: 10 shows (Two additional shows booked on Wednesdays) July 2012 Class A: 3 shows Class B: 9 shows (Two additional shows booked on Wednesdays) August 2012 Class A: 0 shows Class B: 10 shows (Two additional shows booked on Wednesdays) September 2012 Class A: 0 shows Class B: 9 shows


October 2012 Class A: 0 shows Class B: 9 shows November 2012 Class A: 0 shows Class B: 8 shows December 2012 Class A: 0 shows Class B: 10 shows January 2013 Class A: 0 shows Class B: 8 shows Management performs casino-show theatre sales assessment February 2013 Class A: 0 shows Class B: 8 shows March 2013 Class A: 0 shows Class B: 10 shows April 2013 Class A: 0 shows Class B: 8 shows Summary May 2012-April 2013 Total Shows Planned Class A: 6 Class B: 105 Assessment In September 2012 management will assess the use of gambling credits, increase in casino flow and casino sales in comparison to show theatre attendance. If Year 1 show theatre strategy proves profitable for casino, The Company will increase the number of Class A performers and maintain the same number of total shows. Year 2 and Year 3 Show Theatre Schedule Year 2 -3 Class A performers (9 shows)


-105 Class B performances Year 3 -4 Class A performers (12 shows) -105 Class B performances 8.2 Potential Problems to achieving Deadlines The accuracy of the show theatre schedule could be affected primarily by Class A performer cancellations. These cancellations could be due to factors such as illness or performer scheduling conflicts. The Company plans to minimize these risks through binding contractual agreement. A cancelled Class A performer act could offset negative word of mouth for the River Rock show theatre. A second potential problem is the advanced booking time or the possibility of changing performers. Management estimates an 8 month advance booking time-frame. 8.3 Milestones January 2011 Obtain a $500,000 loan by September 1, 2011. September 2011-April 2012 Book Year 1 schedule. Begin scheduling September 2011, will be completed by April 2012. January 2012 8 month assessment of show theatre patron casino usage. January 2012 September 2012-April 2013 Book Year 2 schedule. Begin scheduling September 2012. January 2013 20 month assessment January 2013 September 2013-April 2014 Book Year 3 schedule. Begin scheduling September 2013. January 2014 28 month assessment January 2014


9.0 Financial

9.1 Type and Amount of Financing Required Amount of Financing Required: $500,000 The highest negative cumulative cash flow for the River Rock Show Theatre is the month of December 2011, with a negative cumulative cash flow of $439,172. This represents the maximum amount of financing the Show Theatre is expected to require. To compensate for the possibility of underestimating financing requirements, a buffer of 13.9% will be included in the total financing amount. This brings the amount of financing to $500,000. Type of Financing: The Show Theatre will use debt financing from a financial institution to meet the financing requirement. Financing Contingency Plan: If returns are not seen as quickly as expected additional short term financing or line of credit will be used.


9.2 Pro-forma Income Statement


9.3 Pro-forma Cash Flow Statement


9.4 Pro-forma Balance Sheet


9.5 Notes to Financial Statements and Important Financial Assumptions Related Income statement and cash flow assumptions: The class A artists are paid 50% when the artist is booked for the show and the remainder when the artist performs. Class B artists are paid 25% of their expected ticket sales when booked and the remaining 75% after the performance. It is assumed that the class B acts draw 60% show theater capacity crowds in 2012. Projected capacity for 2013 is 75% of show theatre capacity for class B shows, as well as a 90% show theatre capacity for 2014. All performers’ tickets go on sale 4 months prior to the show date. Class A artists are expected to sell 100% of the tickets in the first month of the tickets being offered. Cash flow specific assumptions: The class A artists are paid 85% of ticket revenue with 50% paid when the artist is booked and the remainder when the artist performs. Class B artists are paid a total of 65% of ticket revenue with 25% of their expected ticket sales when booked and the remaining 75% of their payment of ticket sales after the performance. Class A artists are expected to sell 100% of the tickets in the first month of being offered. Ticket sales for class B artists are expected to have 50% of sales in the first month and the remaining 50% over the next 3 months with 10% in the second month of tickets offered, 10% in the third month and 30% in the month of the performance. Ticket master forwards cash received from the sales of the tickets within the same month of the ticket being sold. Balance Sheet Assumptions: Amortization for the theatre is straight-line method over 25 years.


10.0 Key Risks 10.1 External Environment Risks

- Terms of operational service agreements with lottery corporations - Changes to gaming laws that may impact the Company’s operational service

agreements - Pending, proposed or unanticipated regulatory or policy changes

Corporation, G. C. (2010). Annual report 2009. Richmond: Great Canadian Gaming Corporation. - Cancellations of Class A entertainers due to health or other reasons - Class A entertainers are unavailable for specific dates

10.2 Internal Environment Risks

- Unable to obtain key Class A entertainers that fit with the casino’s target market. - Not a sufficient number of show attendees flow to casino proceeding shows

10.3 Marketing Risks

- The current marketing and promotions outlined in this plan does not create sufficient awareness for shows consistently throughout the year

10.4 Human Resource Risks Dependence on key personnel Corporation, G. C. (2010). Annual report 2009. Richmond: Great Canadian Gaming Corporation.

RISK RESPONSE

Not a sufficient number of show attendees flow to casino proceeding shows

Track casino credit & free drink usage

Unable to obtain key Class A entertainers that fit with casino target market

Post-pone schedule until a suitable fit

Marketing and promotions not sufficient in creating show awareness

Increase advertisement and promotions spending and assess resulting casino profitability


11.0 Contingency Plans 11.1 Contingency Plan if Objectives not met If River Rock Doesn’t Reach Sufficiently Show Capacity Spend more money and marketing efforts in increasing awareness and interest in the shows at River Rock. Examples include radio contests or direct mail marketing towards target market. If show attendees fail to move to casino following shows Management will undergo close analysis between show demographics, gambling credit usage and casino sales, and test various fan bases to determine which are most profitable for casino. Potentially spend additional monies as well as write contractual agreements with the performers which include celebrity appearance gambling after shows to encourage consumer involvement on the gambling floor. Execute direct marketing with past show attendees to market upcoming shows and create repeat visits 11.2 Contingency Plan if Objectives Exceeded If celebrity Class A performers create profits which exceed projections -Management will adjust upcoming show schedules to increase the ratio of Class A performers.