Quote:
Originally Posted by Cube Inmate
Leaving the stadium issue aside for a moment, let's assume the Flames owners foot the bill for a new arena by themselves. There's talk that owners go bankrupt when building their own buildings...so is there really even a business case for it?
What increase in revenue, on an annual basis, is needed to offset an initial cost of $450M amortized over (say) 25 years? It depends on the interest rates of course, but even at 0% interest they would need a minimum of $18M more / year (and more likely $25M+ to account for a reasonable interest / investment rate) to break even on a $450M arena.
I assume hockey-related revenues for the Flames are well in excess of $140M / year, given that the league-wide average is around that amount (based on the $70M cap). It seems reasonable to think that the increased ticket costs, luxury boxes, and (non-HRR) additional event revenue could easily add up to an extra $18-25M/year with a state-of-the-art building, especially if they're allowed to build it right next to downtown.
is it really uneconomical for them to pay for their own building? Are my increase-in-revenue assumptions inaccurate? Again, leaving the stadium issue aside--I'm perfectly willing to accept that building a CFL stadium is a money-losing proposition.
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Essentially, they ARE paying for the arena themselves with $200M out of pocket & $250M financed to be paid back from a share of ticket revenues (ticket tax). The public funding is essentially for the fieldhouse/stadium.