Quote:
Originally Posted by Strange Brew
I'm not sure making the facilities bigger changes this though. You will still have a lottery and demand likely still outstrips supply. It will be that way for any Winter Olympics in Canada.
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Spot on. Which is why you shouldn't size your facilities to maximize profit during the games. Ideally, you should size your facilities to maximize return on that facility's capital cost over the life of that asset.
Sure dropping $50M on a new curling facility would generate more curling ticket revenue during the Olympics than repurposing Max Bell for $10M, but unless that extra Olympic ticket revenue is $40M (doubtful), then you better make sure that facility generates $40M of profit (present valued) over its lifetime.
Those numbers are obviously just total assumptions to make the point.
It all comes down to my new favorite Olympics mantra courtesy of GGG:
"The best case scenario for the Olympics is you get infrastructure you wanted at a discounted price. The worst case is you get infrastructure you didn't want at an inflated price."