Quote:
Originally Posted by bizaro86
I think Murray Edwards always makes the hyper rational business decision. If he thought moving was the better economic decision, I think he'd do it.
The fact of the matter is, there is no place to move that would be in any way better than here in the Saddledome. I also think it's likely that the Flames paying for 100% of a new arena would be more economic for them than moving.
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With the expansion fee being $500 million, it's probably save to assume the Flames could sell for $300 million. The cost of a new arena would be at least $250 million. All in US dollars.
Option 1: Paying for the arena and staying. Life of new arena 30 years.
Costs: $250 million (minimum)
Average Operating Income /yr : $30 million (maybe optimistic given the current economic climate, but also adjusting for future inflation)
Total income: $900 million
Net Profit after 30 years: $650 million
This is probably on the very high side of what the Flames owners could expect and in 30 years they would need to build another arena. Which would probably cost more than $650 million to build.
Option 2: Selling the team for $300 million
Invest the $300 million and re-invest any profits the following year.
5% return over 30 years: $1.3 billion
7% return over 30 years: $2.28 billion
10% return over 30 years: $5.2 billion
Even at the conservative 5% they are making double the money if they just sell the Flames and invest it.