The Indoor Court Arms Race Is Heating Up in the Midwest

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Today, we have an indoor court arms race in the Midwest! Let’s get to it.

💸 Kalamazoo Plans To Make Hotels Pay For Its New Facility

Kalamazoo, Michigan plans to fund a $40 million youth indoor sports facility through a 4% occupancy tax on nearby hotels.

The Details:

• Jane Ghosh, the President and CEO of Discover Kalamazoo, the county’s tourism arm, is leading the charge.

• The facility would be between 120,000-150,000 square feet and feature 8 basketball courts and 16 volleyball courts.

• The county is proposing that nearby hotels with 35+ rooms pay a 4% assessment on hotel rooms, which would be used to pay a 30-year bond to build the facility.

• Hotel operators will vote on the proposal. Each hotel room would count as one vote. 60% of votes are needed for the measure to pass.

• It would be up to hotels to decide whether they pass this tax on to customers.

• The current county lodging tax is 5%, so total taxes and assessment for visitors would jump to 9%, or roughly per $16 per night for the average hotel room in the area.

Analysis

Youth sports tourism is booming.

Facts:

• 63% of respondents to a 2023 travel study for the sports sector said youth and amateur sporting events were the top generator of room nights.

• It’s estimated that non-pro sports tourism accounts for anywhere from $39 billion to $52 billion in direct spending per year, with youth and amateur sports making up a large portion of that (also includes collegiate tournaments).

• In Kalamazoo, the new facility is projected to generate an additional 36k room nights per year by 2030— based on current rates, that’s upwards of $5 million per year just on hotel stays.

The total economic impact of the facility is estimated to be many multiples of hotel spending.

A feasibility study predicts Year 1 attendance of ~300k growing to ~600k in Year 4.

The total economic output would jump from $18M in Year 1 to nearly $50M in Year 4, and more than $1 billion over 20 years.

Why Such Big Numbers?

The feasibility study follows a national trend that indoor court facilities are in both high demand and low supply:

The indoor sports with the most participation nationwide are, by far, basketball and volleyball.

Never mind that the report found a strong showing in “occasional” and “infrequent” participants in both sports, indicating there is room for more people to become “frequent” participants— especially if well‐designed facilities are available.

So, the facility would include 8 basketball courts and 16 overlapping volleyballs courts, and what appears to be a way-too-small concession stand:

The pool of people it can pull from is MASSIVE.

The study found that there are hundreds of thousands of residents within a 30-minute drive, more than a million within an hour drive, and 20 million within a 3-hour drive.

In conclusion, the big winner in sports tourism is hotel owners— so it’s no surprise municipalities are asking them to help pay for construction of new facilities.

Other cities have levied similar taxes for sports tourism efforts (youth to pro), but it’s always fun to see the nitty gritty details of such efforts.

🤺 Similar Facilities Planned Nearby

Not too far away in Fort Wayne and New Haven, Indiana (it’s in the map screenshot!), two major proposed fieldhouse projects will not only be in competition with the Kalamazoo facility, but also with each other!

Per Inside Indiana Business (paywall):

CEO Andy Card of Card and Associates, which will own and operate the New Haven project told Local TV: “There’s no question there’s going to be competition. It’s going to be gloves off.”

Alec Johnson, Fort Wayne’s deputy director of development, was a bit more diplomatic: “We look forward to both facilities offering needed benefits to the community and region and don’t believe there will be competition but an opportunity for growth and success at both venues.”

The ol’ “we look forward” is never the sign of a healthy relationship.

Card’s President, Billy Bunkowfst, isn’t looking forward to much: “There’s definitely synergies between our outdoor component and their indoor component. But I can also tell you that our indoor component was meticulously planned around the existing inventory and partnerships that already exist."

Fort Wayne will own its North River Fieldhouse and contract with someone to operate it.

The New Haven project will have “at least five” indoor courts, while Fort Wayne proponents believe it will need 8+ basketball-volleyball combo courts.

You can spot the trend here: Basketball, volleyball, indoor courts, Midwest, within driving distance of large population centers. And competition.

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Good game.