Economics of Opening a

Children’s Museum

Elena Kazlas

Principal, ConsultEcon

Peter Kuttner, FAIA

Principal, CambridgeSeven

Esther De Sola-Pijl

Children’s Museum Curaçao

Rebecca Shulman Herz

The Peoria PlayHouse Children’s Museum

Peter Olson

Knock Knock Children’s Museum

Outline

Today’s Points

Market and Operating Viability

Elena Kazlas, ConsultEcon

Site, Concept, Hard Costs vs. Soft Costs

Peter Kuttner, CambridgeSeven

Pre-Opening Experience & Managing DonorsEsther De Sola-Pijl, Children’s Museum Curaçao

Rebecca Shulman Herz, The Peoria PlayHouse

Children’s Museum

Peter Olson, Knock Knock Children’s Museum

Importance of Understanding Your

Museum’s Market and Operating Viability

• Reviews Proposed Site(s) / Location from a

Market & Economic Perspective

• Identify Target Audiences and Market Segments

• Size and Scale of Available Markets

• Identify Range of Visitation and Use Potential

• “Right size” Facility and its Components

Importance of Understanding Your

Museum’s Market and Operating Viability

• Link Design Development and Decision Making

to Market Factors and Business Planning

• Identify Earned Revenue Potential

• Identify Non-Earned Revenues Required for

Sustainable Operations

• Informs Capital and Annual Fundraising Needs

in the Public and Private Sector

Keys to

Successful Museum Planning

Source: ConsultEcon, Inc.

Target Audiences

Source: ConsultEcon, Inc.

Market and Economic

Feasibility Process

Source: ConsultEcon, Inc.

What is Your

Market Area Definition

Source: ESRI, ConsultEcon, Inc.

• Key to Market Analysis is Defining and

Segmenting the Market Area

• Potential Data Sources to Use:

• Resident market – Census, Esri,

School District, State/Local Gov., etc.

• Tourist market – state and local

destination marketing organizations

What is Your

Market Area Definition

Source: ESRI, ConsultEcon, Inc.

• Apply “Gravity Model” Approach

• Adjust definition based on:

• Existing Attendance Patterns, if Available

• Population and Household Composition

• Demographic and Economic Trends

• Trends in Leisure / Cultural Participation

• Transportation Networks

• Development Pattern / Urbanization

Drive Time Analysis

Source: ESRI, ConsultEcon, Inc.

• 10-, 20-, and

30-Minute

Drive Time

Areas

• How far is

your

potential

market

reach?

Drive Time Analysis

Source: ESRI, ConsultEcon, Inc.

• 30-, 60-, and

90-Minute

Drive Time

Areas

• How far is

your

potential

market

reach?

Rings Analysis

Source: ESRI, ConsultEcon, Inc.

• 25- and 50-

Mile Rings

• Day trip

tourist is

often defined

as person

who travels

more than

50 miles one

way on a trip

Metro Area

Source: ESRI, ConsultEcon, Inc.

• Metro

Area

includes

Franklin,

Johnson

and Wake

Counties

Mixing Methods

Source: ESRI, ConsultEcon, Inc.

• Metro Area and Rings Map Overlay

Mixing Methods

Source: ESRI, ConsultEcon, Inc.

• Metro Area and Drive Time Areas Map Overlay

Mixing Methods

Source: ESRI, ConsultEcon, Inc.

• Metro Area and Drive Time Areas Map Overlay

Rings Analysis

Source: ESRI, ConsultEcon, Inc.

• Drive Times Areas and Rings Map Overlay

Competitive Context

Source: Knock Knock Children’s Museum

Market and Economic Analysis

• Components of Market Analysis

• Resident Markets

• Tourist Markets

• Local and Regional Attractions

• Competitive and Complementary

Context

• Industry Benchmarking

• Case Studies / Comparable Projects

Market and Economic Analysis

• Components of Site Analysis

• Location

• Site Characteristics

• Adjacent, Nearby and Supportive Uses

• Regional Highways and Local Road

Network

• Accessibility and Visibility

• Parking Potential

• Public Transportation Context

Market and Economic Analysis

• Visitation Potential Analysis

• Clear Resident and Tourist Market

Segmentation to Avoid Double Counting

• “Top Down” Approach

• Capture Rates

• General Admissions

• Group Admissions

• Memberships and Admissions

Market and Economic Analysis

• Visitation Potential Analysis (continued)

• “Bottom Up” Approach

• Linking Facility Program Areas to

Visitation Categories

• Identify Key Organizational

Programs, Events and Facility

Rentals

• What’s the Marketing Plan?

• What’s the Business Plan?

Market and Economic Analysis

• Visitation Potential Analysis (continued)

• Understanding Seasonality

• Facility Throughput and Peak

Attendance Days

• “Right Sizing” the Plan for High

Visitation Days

• Market-Based Physical Planning

Parameters

Market and Economic Analysis

• Operating Potential Analysis

• Mix of Sources of Revenue

• Earned Revenue Potential

• Non-Earned Revenue Requirements

• Other Investment / Endowment Revenue

• Illustrative Personnel Plan

• Operating Expenses

• Net Operating Income

• Capital and Operating Reserves

• Replacement Costs

• Debt Service – not recommended

Make Your Case – Socio-Economic

Benefits of New Children’s Museum

1. One Time Construction Impacts2. New Jobs3. Economic and Fiscal Impacts due to Ongoing

Operations (includes direct, indirect and induced)4. Qualitative Assessment of Economic Impacts

a) Childhood Development b) Community Development and Revitalizationc) Expansion of Tourism Offeringsd) Quality of Life - Ultimately, a new or expanded

children’s museum can be a source of community pride and identity, enhancing a location as a place to live, work, and recreate, and thus improving all aspects of local economy and community.

Economic Impacts -

Multiplier Effect Flow Chart

Source: ConsultEcon, Inc.

Socio-Economic Impact Study

Quantifiable Impact Categories

• Jobs

• Earnings

• “Direct” Spending

• Development, Ongoing Operations, and

Off-Site Spending Associated with Visit

• “Indirect and Induced” Multiplier Effects

due to Direct Spending Categories

• Total Impacts = Direct + Indirect + Induced

Socio-Economic Impact Study

Quantifiable Impact Categories (continued)

• Fiscal Revenue Generation

• Permitting and Other One Time

Development Related Fees

• Annual Income Taxes

• Annual Sales and Use Taxes

• Annual Room Taxes

• Potential Fiscal Expenses

• One-Time Development Related

• Annual Public Safety

Socio-Economic Impact Study

Qualitative Community Benefits

• New Quality of Life Cultural Amenity

• New Leisure Time Destination and

Community Event Venue that Promotes

Community Connectivity, Social

Cohesion, and Pride

• New Informal Education Infrastructure

and Programming to Support Learning

for Target Audiences (youth, families,

and other potential niche segments)

Socio-Economic Impact Study

Qualitative Community Benefits (continued)

• New Tourist Infrastructure to Increase

Tourist Spending / Lengthen Tourist

Stays

• Community Revitalization – Filling

Vacant Space or Encouraging Nearby

“Spillover” Development

• Community and Destination Branding

• Public-Private Partnership Building

Site and Concept Drivers

as Related to Market Analysis

• Market/Attendance Potential Contributes to Size

and Scale of Exhibit Areas

• Exhibit Areas, Organizational Programs, and

User Group Demand for Rental Space

Contribute to Overall Facility Size and Scale

• Local Competitive Context and Comparable

Institutions Experience Impact Program

• Parking Requirements and Local Zoning and

Building Ordinances

Site and Concept

Opportunities

• Market/Attendance Generates Exhibit Area

• Exhibit Area Generates Facility Size

• Local Comparable Institutions Impact Program

• Parking Requirements

• Education Component

• Retail Shop

• Food Service

• Earned Income Spaces

• Birthday Party

• Facility Party

Site Concept Size

Exhibit Size 100,000 Visitors/6 – 8 Visitors per Exhibit SF12,500 sf – 16,000 SF of Exhibits

Average = 8.6

Media = 6.4

Facility Size 12,500 SF – 16,000 SF of ExhibitsFacility SF = 2x – 3x Exhibit SF25,000 SF – 48,000 SF

Mid-Range =

35,000 SF for 100,000 Visitors

Hard Costs vs. Soft Costs

and Total Projects Costs

Hard Costs vs. Soft Costs

Construction and Fabrication

Hard Costs

• Base Building

• Construction

• Renovation

• Rental or Move-in

• Exhibit Fabrication and Installation

• Fabricator

• Volunteers

• Self-Build

Hard Costs vs. Soft Costs

Architecture and Exhibit Fees

Hard Costs

• Base Building

• Exhibit Fabrication and Installation

Soft Costs

• Architect/Engineering Fees

• 7% to 14% of Base Building Cost

• Exhibit Design Fees

• 25% - 30% of Exhibit Cost

Hard Costs vs. Soft Costs

Additional Owner’s Costs

Hard Costs

• Base Building

• Exhibit Fabrication and Installation

Soft Costs

• Architect/Engineering Fees ………. 7% to 14%

• Exhibit Design Fees ……………….. 25% - 30%

• Consultants – Legal, Survey, Geotechnical

• Furniture, Fixtures & Equipment FF&

• Management Costs

• Capital Campaign Costs

Hard Costs vs. Soft Costs

Contingencies and Allowances

Contingencies

• Owner’s – recommended 10%

• Cost Estimate – smaller as design progresses

• Contractor’s – included in bid

Allowances

• Start-up Operating Expenses - 25% to 50% of

annual operating expenses

• Inventory for Store (Cost of Goods Sold) – 50%

of estimated COGS for Year 1

ACM Quick Poll – 19 Museums That

Opened Between 2009-2017

Museum

Location

Context Opened

Pretend City Children's Museum Suburban 2009

Children's Discovery Museum (Saskatoon) Urban 2009

Mississippi Children's Museum Urban 2010

Kansas Children's Discovery Center Urban 2011

Terry Lee Wells Nevada Discovery Museum Urban 2011

Sacramento Children's Museum Suburban 2011

Bucks County Children's Museum Suburban 2012

Stellar Children's Museum (India) Urban 2012

Cheshire Children's Museum Rural 2012

St. George Children's Museum Suburban 2013

Wonderfeet Kids' Museum Rural 2013

Southern California Children's Museum Suburban 2014

Galveston Children's Museum Urban 2014

Santa Cruz Children's Museum of Discovery Suburban 2014

Central Wyoming Children's Center for Art,

Technology & Science (CATS) Rural 2014

Children's Museum of Findlay Rural 2014

Peoria PlayHouse Children's Museum Urban 2015

Knock Knock Children's Museum Urban 2017

Children's Museum of Curacao Suburban 2017

Number of Children’s Museums that Opened Per Year

Source: ACM and ConsultEcon, Inc.

ACM Quick Poll –

Total Cost Per Square Foot (SF)

Ranged from $3/SF to $673/SF

Museum

Location

Context Opened New/Renovate

Total

Square Feet

(SF)

Total Cost

to Open

Total Cost

Per SF

Mississippi Children's Museum Urban 2010 Built new 39,500 $26,600,000 $673

Knock Knock Children's Museum Urban 2017 Built new 26,000 $14,000,000 $538

Peoria PlayHouse Children's Museum Urban 2015 Renovate existing site 10,000 $5,000,000 $500

Kansas Children's Discovery Center Urban 2011 Built new 15,708 $7,500,000 $477

Terry Lee Wells Nevada Discovery Museum Urban 2011 Renovate 67,000 $19,500,000 $291

Pretend City Children's Museum Suburban 2009 Renovate 28,000 $7,028,439 $251

Children's Museum of Curacao Suburban 2017 Renovate existing site 4,000 $550,000 $138

Bucks County Children's Museum Suburban 2012 Renovate 5,000 $500,000 $100

Southern California Children's Museum Suburban 2014

Renovate an existing

site/store front 2,500 $223,500 $89

Sacramento Children's Museum Suburban 2011 Renovate 7,000 $500,000 $71

Stellar Children's Museum (India) Urban 2012 Renovate 10,700 $600,000 $56

Galveston Children's Museum Urban 2014

Renovate an existing

site 5,000 $150,000 $30

Santa Cruz Children's Museum of Discovery Suburban 2014 Renovate existing site 8,000 $199,000 $25

St. George Children's Museum Suburban 2013

Renovate existing site

(city-owned historic

building) 11,000 $250,000 $23

Cheshire Children's Museum Rural 2012

Moved into

renovated building 3,600 $50,000 $14

Children's Discovery Museum (Saskatoon) Urban 2009

Install new exhibits in

a mall space 1,900 $20,000 $11

Central Wyoming Children's Center for Art,

Technology & Science (CATS) Rural 2014 Renovate existing site 4,500 $46,000 $10

Wonderfeet Kids' Museum Rural 2013

Rent-free space

donated downtown 1500 $10,000 $7

Children's Museum of Findlay Rural 2014 Rent space in a mall 7,000 $23,000 $3Source: ACM and ConsultEcon, Inc.

ACM Quick Poll –

Total Cost Per Square Foot (SF)

Ranged from $3/SF to $673/SF

Source: ACM and ConsultEcon, Inc.

ACM Quick Poll –

New Construction $477- $673/SF

Kansas

Mississippi

ACM Quick Poll –

Renovation $71 - $291/SF

Pretend City

Sacramento

Nevada

Buck’s County

ACM Quick Poll –

Store Front $3 - $89/SF

Findley

Wonderfeet

Southern California

Central Wyoming

Santa Cruz

Percentage Split of Total

Development Costs

Source: ACM and ConsultEcon, Inc.

Average & Median Percentage Split

of Total Development Costs

of 16 Children’s Museums

Derived

Construction

& Other

Costs

Cap

Campaign

Expenses

Site

Acquistion

Site design /

Engineering

fees Exhibits Legal fees

Furniture,

fixtures,

equipment

Pre-opening

marketing

Office /

General

operating

supplies

Program

supplies

Average 45% 1% 1% 3% 37% 0% 6% 3% 3% 1%

Median 40% 0% 0% 2% 37% 0% 4% 1% 2% 0%

Source: ACM and ConsultEcon, Inc.

Total Development Costs

Feasibility Analysis

Administration

Fundraising and Financing

Legal

Marketing

Branding / Logo / Web Site

Business Planning

Project Management

Land Acquisition

Permitting

Building Construction

Architectural Design

Exhibit Design

Furniture, Fixtures & Equipment

Staff Recruitment, Training & Uniforms

Education

Management Information Systems / IT / Ticketing / Web Retail

Gift Shop fit-out and COGS

Food Service fit-out, if appropriate

Examples of When Executive

Director was Hired from ACM Poll

Museum Opened New/Renovate

When Executive Director Hired

(in months prior to opening)

Pretend City Children's Museum 2009 Renovate 4 years

Children's Discovery Museum (Saskatoon) 2009

Install new exhibits in a

mall space Still haven't (as of 2014)

Mississippi Children's Museum 2010 Built new 4 years

Kansas Children's Discovery Center 2011 Built new

Original team member transitioned

to ED

Terry Lee Wells Nevada Discovery Museum 2011 Renovate 13

Sacramento Children's Museum 2011 Renovate 2 months

Bucks County Children's Museum 2012 Renovate 12

Stellar Children's Museum (India) 2012 Renovate 12

Cheshire Children's Museum 2012

Moved into

renovated building 1 month (board member)

St. George Children's Museum 2013

Renovate existing site

(city-owned historic

building) 6 months

Wonderfeet Kids' Museum 2013

Rent-free space donated

downtown 0

Southern California Children's Museum 2014

Renovate an existing

site/store front

We don't have an Executive

Director, just Board of Directors and

staff

Galveston Children's Museum 2014 Renovate an existing site Founder became executive director

Santa Cruz Children's Museum of Discovery 2014 Renovate existing site

Volunteer executive director began

full-time 5 months before opening.

Central Wyoming Children's Center for Art,

Technology & Science (CATS) 2014 Renovate existing site

Founder functions as executive

director and director of education,

has PhD

Children's Museum of Findlay 2014 Rent space in a mall 2 months

Peoria PlayHouse Children's Museum 2015 Renovate existing site 6 months

Knock Knock Children's Museum 2017 Built new 10 months

Children's Museum of Curacao 2017 Renovate existing site 12 months Source: ACM and ConsultEcon, Inc.

Keys to Economic Sustainability

of a Children’s Museum

10. Offers Opportunities to Spend and Relax9. Offers Multiple Visit Opportunities8. Appeal to a Audience Mix (children and caregivers)7. Serves Residents and Tourists6. Outstanding Exhibits and Programs5. Depth of Visitor Experience Offered / Length of Stay / Attraction Content 4. Strong Thematic Focus3. Critical Mass of Attraction Elements2. Good Location and Site1. Established on Sound Financial Basis

Pre-Opening Experience &

Managing Donors

Panelist discussion with Esther, Rebecca and

Peter about their experience – Peter and Elena to

chime in as appropriate

Questions & Answers