Quote:
Originally Posted by Ducay
Again, you're looking at this in an apples to apples approach.
What makes it work in Winnipeg isn't the arena itself. Lets say it cost $500m for either arena. Winnipeg pays for it all and makes it work and only earns 1% return on the new arena (bear with me), assuming you could see arenas return alone. So CSEC says, nope, 100% doesn't work, nor does the 1/3 model, because they need to earn 10% return.
From your perspective, Winnipeg made it work at 1% and CSEC is being greedy because they want to hold out to 10%.
Ignoring the fact that they may have different risk profiles and costs of capital, the value in Winnipeg isn't from a new arena, it was from the ability to get the team at all. Winnipeg (TNSE) may have sacfiriced to make only 1% on the arena, because the real return for that ownership group comes from the value of the franchise as a whole and its increased value. So they either ate a lower return or got no team at all. CSEC isn't in the same position. Winnipeg is going from $0 revenue to $XXX million. Calgary is only going to be getting a minor increase in revenues annually with a new building.
Is it? $600m for how much increased revenue every year? Once you add in discounting, making back your $600m on only incremental revenue is tough.
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Well, I suppose they'll just have to try to sell or move the franchise then. That's their prerogative. But, if I were them, I wouldn't expect much sympathy or many well wishes on this forum (or in southern Alberta in general). That's our prerogative.