Case Study - Indoor Go Karting in Ulaanbaatar
Exploring the potential to improve the current entertainment void in Ulaanbaatar
March 31 (M.A.D.) With an ever increasing income per capita coupled with a demographically young population, the need for good entertainment options in Ulaanbaatar is increasingly evident. The city currently lacks in entertainment options which are not solely based around food or alcohol, the three cinemas in the city are consistently packed and the single bowling alley is ever more popular. Winters are long, conditions are harsh and a bored youth leads to increases in vandalism and petty crimes.
Go-kart centres can be found the world over in nearly every capital city. It provides for a cheap and fun thrill that is well suited to all ages. In terms of logistics, it is relatively simple to put in place. The location of the go-kart centre does not need to be within the heart of the city but can rather be located within the Khan-Uul or Yarmag districts of Ulaanbaatar (the old factory district) as it has easy access by public transport to the city centre, adequate available land, and easy access to infrastructure.
A go-kart centre would appeal to both young families as well as more mature audiences due to its nature and could additionally be used to host corporate events throughout the year. As it would be indoors, it would be open year round with a number of shifts running through the day as some of the side activities at the centre such as the climbing wall or a skateboarding park would open early while the Go-Karting races could be open until 2am.
A 10,000 sqms plot of land would be required, this would be split between a 5,000 sqms warehouse and sufficient dedicated secure outside parking. The length of track within the warehouse could probably reach 1km, possibly a little more if designed with a mezzanine floor. We estimate the cost of purchase of a suitable plot of land at 500,000 USD, the construction of the warehouse would cost approximately 3,250,000 USD (650 USD per square meter x 5,000 square meters). In addition to this, the equipment is estimated to cost 500,000 USD while the decoration of the centre would probably cost about 150,000USD. This would bring a total cost for the warehouse, equipment, decoration and land of approximately 4,400,000 USD.
Initial Set Up Costs:
Land - 500,000
Construction - 650 * 5000 = 3,250,000
Equipment - 500,000
Decoration - 150,000
Total = 4,400,000 USD
Financially, a go-kart centre of this type would run approximately 12 to 14 karts per race with approximately 30 to 40 races per day during weekdays at a 10USD ticket price per race per kart. During the week-ends (50 days), we expect the centre to run about 60 to 70 races per days. In addition to direct revenues from the races, other streams of revenue can be found in drink and food outlets as well as corporate sponsorships. This would bring in estimated revenues of about 1,750,000 USD per annum.
Estimated Revenues:
Week days * 300 days * 40 races * 10$ * 10 karts = 1,200,000
Week ends * 50 days * 70 races * 10$* 10 karts = 350,000
Other net Income (food, drinks, sponsorships, etc) = 200,000
Total / Year = 1,750,000
In terms of expenses, there are the employees, the power, the maintenance of the go-karts and the equipment, the fuel and other miscellaneous expenses. We expect them to total approximately 600,000 USD per year.
Estimated Expenses:
Employees - 15,000 USD / Month
Power / Utilities - 5,000 USD / Month
Maintenance - 10,000 / Month
Fuel - 10,000 / Month
Other - 10,000 / Month
Total / Year = 600,000 USD
This would thus generate an overall profit of approximately 1,150,000 USD. The land and warehouse would further benefit from considerable capital growth over the years but we have excluded this from the present calculations as it should be treated as a separate transaction.
The above is clearly a very simplified overview of such a proposal that does not include the cost of financing, depreciation, initial built, taxes and so forth but in our opinion it makes financial sense to pursue the idea further and we very much hope that someone does soon.
March 31 (M.A.D.) With an ever increasing income per capita coupled with a demographically young population, the need for good entertainment options in Ulaanbaatar is increasingly evident. The city currently lacks in entertainment options which are not solely based around food or alcohol, the three cinemas in the city are consistently packed and the single bowling alley is ever more popular. Winters are long, conditions are harsh and a bored youth leads to increases in vandalism and petty crimes.
Go-kart centres can be found the world over in nearly every capital city. It provides for a cheap and fun thrill that is well suited to all ages. In terms of logistics, it is relatively simple to put in place. The location of the go-kart centre does not need to be within the heart of the city but can rather be located within the Khan-Uul or Yarmag districts of Ulaanbaatar (the old factory district) as it has easy access by public transport to the city centre, adequate available land, and easy access to infrastructure.
A go-kart centre would appeal to both young families as well as more mature audiences due to its nature and could additionally be used to host corporate events throughout the year. As it would be indoors, it would be open year round with a number of shifts running through the day as some of the side activities at the centre such as the climbing wall or a skateboarding park would open early while the Go-Karting races could be open until 2am.
A 10,000 sqms plot of land would be required, this would be split between a 5,000 sqms warehouse and sufficient dedicated secure outside parking. The length of track within the warehouse could probably reach 1km, possibly a little more if designed with a mezzanine floor. We estimate the cost of purchase of a suitable plot of land at 500,000 USD, the construction of the warehouse would cost approximately 3,250,000 USD (650 USD per square meter x 5,000 square meters). In addition to this, the equipment is estimated to cost 500,000 USD while the decoration of the centre would probably cost about 150,000USD. This would bring a total cost for the warehouse, equipment, decoration and land of approximately 4,400,000 USD.
Initial Set Up Costs:
Land - 500,000
Construction - 650 * 5000 = 3,250,000
Equipment - 500,000
Decoration - 150,000
Total = 4,400,000 USD
Financially, a go-kart centre of this type would run approximately 12 to 14 karts per race with approximately 30 to 40 races per day during weekdays at a 10USD ticket price per race per kart. During the week-ends (50 days), we expect the centre to run about 60 to 70 races per days. In addition to direct revenues from the races, other streams of revenue can be found in drink and food outlets as well as corporate sponsorships. This would bring in estimated revenues of about 1,750,000 USD per annum.
Estimated Revenues:
Week days * 300 days * 40 races * 10$ * 10 karts = 1,200,000
Week ends * 50 days * 70 races * 10$* 10 karts = 350,000
Other net Income (food, drinks, sponsorships, etc) = 200,000
Total / Year = 1,750,000
In terms of expenses, there are the employees, the power, the maintenance of the go-karts and the equipment, the fuel and other miscellaneous expenses. We expect them to total approximately 600,000 USD per year.
Estimated Expenses:
Employees - 15,000 USD / Month
Power / Utilities - 5,000 USD / Month
Maintenance - 10,000 / Month
Fuel - 10,000 / Month
Other - 10,000 / Month
Total / Year = 600,000 USD
This would thus generate an overall profit of approximately 1,150,000 USD. The land and warehouse would further benefit from considerable capital growth over the years but we have excluded this from the present calculations as it should be treated as a separate transaction.
The above is clearly a very simplified overview of such a proposal that does not include the cost of financing, depreciation, initial built, taxes and so forth but in our opinion it makes financial sense to pursue the idea further and we very much hope that someone does soon.
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